New York Forex Report: All Eyes on Yellen

New York Forex Report: All Eyes on Yellen

New York Forex Report: Headline economic release from the European session was the second reading on UK GDP, which came in inline with market expectations, +0.6% q/q vs 0.6% prev, 0.6% exp, +2.2% y/y vs 2.2% prev, 2.2% exp and Business Inventories -0.8% y/y vs -0.8% prev, -1.4% exp, data did little to move sterling as traders remain entrenched on the sidelines ahead of the much anticipated FED Chairs Yellen’s speech this afternoon from Jackson Hole Economic Symposium, majors enter the North American session GBP +0.05%, EUR +0.03%, JPY -0.09% with the USD Index -0.06%. Options activity has been muted this morning, desks note downside risk to short dated volatility positioning if Yellen fails to deliver any meaningful direction for the USD.

FX Majors: EUR latest German IFO surveys have shown a surprising fall in business confidence during August, undermining market belief that the Eurozone had escaped the initial Brexit shock unscathed. The Business Climate index dropped from 108.3 to 106.2 while the Current Assessment has fallen from 114.8 to 112.8. In addition, expectations have dropped from 102.2 to 100.1. GBP UK GDP will be scrutinized as traders look for economic data to determine the severity of the Brexit shock. Meanwhile, Fed Chair Yellen’s speech will be closely watched as markets continue to weigh the likelihood of another rate hike this year JPY Japanese core consumer prices declined for a fifth straight month and marked the biggest drop in more than three years in July. The nationwide core consumer price index fell 0.5 percent in July from a year earlier, adding pressure to the Bank of Japan to expand stimulus program.

EURUSD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: As last weeks highs are hurdled bulls target 1.1430 next. Near term support is sited at 1.1230, only a failure below 1.12 would concern the near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

GBPUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Technical: As prior resistance at 1.31 now acts as support broader range resistance sited at 1.3370 is the next upside objective. Only a close below 1.3000 would suggest a termination of the current correction
Retail Sentiment: Bearish
Trading Take-away: Long

USDJPY
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: As 101 caps profit taking expect further downside pressure with 97.30 the next downside objective. Only a move over 101.50 will ease near term bearish bias.

Retail Sentiment: Bullish
Trading Take-away: Short

EURJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Technical: Near term resistance is sited at 114, as this area caps the correction expect a drift back to test and breach 112 support.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD declined further to a 4-week low ahead of this Friday’s Jackson Hole symposium amidst more hawkish comments from another two Fed senior officials on Thursday. Oil prices initially fell after Saudi Arabian Energy Minister Khalid Al-Falih told Reuters on Thursday (25 Aug) that he does not believe it is necessary for any “significant intervention” in oil markets at this time and that Saudi produced 10.67 million barrels per day of crude oil, the most in its history, in July, and Al-Falih said that production has remained around that level but he did not cite a specific number for August. AUD lifted more than 5% in the last two months but acted quiet in August largely due to conflicting views on US monetary policy. CAD edged slightly higher against the USD, trading in a narrow range before the start of a gathering of central bankers in Jackson Hole.

AUDUSD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: The close over .77 shifts attention to broader range resistance sited at .7830, bulls will be looking for pivotal .7550 to support only a close below .7500 would concern the near term bullish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

USDCAD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: With the breach of 1.2843, attention shifts to 1.2718 symmetry swing support. Near term resistance is sited at 1.30.
Retail Sentiment: Bullish
Trading Take-away: Short

XAUUSD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish

Technical: Bulls target 1391 as the next upside objective, near term support is sited at 1330 is under pressure pivotal support is sited at 1301 which represents AB=CD equidistant swing support. Below 1300 opens 1270.
Retail Sentiment: Bullish
Trading Take-away: Short

USOIL
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish

Technical: As 46.50 supports expect a further rind higher to test 50.00 as the next upside objective, only below 43.60 concerns the near term bullish bias
Retail Sentiment: Neutral
Trading Take-away: Neutral