New York Forex Report: FED Doves On Deck

New York Forex Report: FED Doves On Deck

New York Forex Report: Another solid US employment report on Friday and subsequent price action suggests that the broader USD can move into a consolidation/correction phase, with US rates looking set to do the same. We have little data out of the US this week until the very important inflation release on Friday. Ahead of that we get a few Fed speakers who will be listened too in regards to the language change around the inflation risks. Today, we have Bullard and Kashkari speaking. The USD bear trend remains intact and has further to run and view rebounds as corrective at this stage. OPEC meet today to discuss output compliance. Oil prices have been consolidating around mid-range, after recovering from the June lows. Overnight, we will get the latest trade report from China, which may also have some bearing on commodity and commodity currency prices if there is significant shift in the readings. AUDUSD and USDCAD have been in a steady correction phase since the 27th June, which are ongoing but approaching important levels in the 0.7875-0.7825 and 1.2750-1.2800 region respectively

USD US data turned more upbeat Friday, bucking the recent trend of lesser reports and providing a lift to the USD. The change in nonfarm payrolls increased more than expected in Jul, adding 209k jobs into the labour market while the data in June was upwardly revised to 231k from 222k. Unemployment rate dipped to 4.3% in July as expected, down from 4.4% previously though this is highly likely due to increased labour participation rate from 62.8% to 62.9% in July. Wage growth looked decent as earnings grew 2.5% YoY in Jul, steadying from June against an expected softer increase of 2.4%. Meanwhile, trade deficit narrowed to $43.6b in June, retreating from a shortfall of $46.4b.

EUR Eurozone retail sector grew at a slower pace in Jul as indicated by a drop in PMI to 51.0 from 53.2 in June. The less robust pace of growth was most felt in Germany based on a decline in PMI from 54.5 to 50.7, while the moderation in France pushed its PMI down to 54.1 from 56.3. The retail sector remained in contraction in Italy.

GBP Markets got a first glimpse of the Brexit “divorce bill” as the Sunday Telegraph reported that UK will put GBP36bn (EUR40bn) on the negotiation table with EU, citing three unnamed government officials although Brexit Secretary David Davis subsequently told the Sunday Times that the report was “news to me.”

JPY Domestic inflationary pressures remain dampened in Japan as the latest June labor cash earnings chowed an unexpected decrease to -0.4%YoY (from +0.6%YoY in May and well missing the forecast of +0.5%). The contraction of real wages was even worse at -0.8%YoY in June (from 0%YoY in May, and missing forecast of +0.1%).

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

Technical: 1-3 Day View – Pivotal 1.1730 holds on the first test as this level contains downside reactions bulls look for a retest of cycle highs en route to 1.20 only a daily close below 1.1660 concerns the near term bullish bias setting a top for a test of 1.1440

1-3 Week View – 1.1876 achieved focus shifts to 1.20 . Weekly close below 1.14 neutralises bullish objectives.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – 1.31 daily closing breach concerns the near term bullish bias opening a retest of 1.28, near term resistance is sited at 1.3110, only a close over 1.3160 reestablishes near term bullish tone

1-3 Week View – The weekly close above 1.3045 targets the broader symmetry swing objective sited at 1.3263 only a close back below 1.28 would jeopardise the bullish advance.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – As 111.65 contains upside reactions 108.93 is the immediate downside objective. Near term support is sited at 110.30/50

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – Expected move through 130.70/80 plays out focus shifts to 133.36 upside objective as 130.60/40 supports, below 129.40/20 suggests false break.

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, 129.44 upside objective achieves as 128 supports bulls look for a move to test 133.36 as the broader upside objective.
Retail Sentiment: Bearish
Trading Take-away: Long