New York Forex Report: GBP Gains On UK/US Trade Talks

New York Forex Report: GBP Gains On UK/US Trade Talks

New York Forex Report: The USD is extending the broad retreat that took hold of the markets last week. Traders are perhaps reacting to the stark, dark undertones of the President’s inauguration speech Friday and awaiting early action from the new administration to bolster confidence in the Trump reflation trade. Within the G10 FX space, the JPY is performing strongly on the day, reflecting a safe haven bid as European stocks and US futures retreat. Meanwhile, the GBP, which could benefit from suggestions that the UK/US could strike a quick bilateral trade deal after Brexit, continues to show signs of a broader stabilisation. Note UK PM May is scheduled to visit Washington Friday for talks with the president. Major commodities are mixed; the energy complex is weaker while precious and base metals are mostly lower. For the session ahead, full media access to the entirety of Trump’s first full day in office means events here will likely dominate the news flow.

FX Majors: EUR rose against the USD amid reports that the Euro area’s current account surplus advanced. A continued narrowing spread between the US’s 2-year Treasury yield and Germany’s 2-year Bund yield added support to gains in the EUR GBP Rising inflation in UK weighed down on retail sales last month, signalling a slowdown in consumer spending as the country braces for a hard Brexit. Retail sales dropped 1.90% MOM in December (November: revised to -0.10% MOM) and marked its quickest pace of decline since April 2012. JPY weakened against the USD amid a decline in Japan’s 2-year government bond yield. Japan’s manufacturing PMI, unemployment and inflation data, along with import and export figures will be closely watched this week.

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

Technical: Test of pivotal larger 1.0788 symmetry resistance is the next upside objective. Anticipated sellers/profit taking to emerge at the initial test of this level. Near term support sited at 1.0670, on a close back below 1.0580 resets near term bearish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Confirmation of a more bullish bias will be achieved on a close above symmetry swing resistance sited at 1.2458, near term support is sited at 1.2250
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Broader corrective phase to test 112 is now underway, a breach here will open 110.70 symmetry swing support underpinned by 109.90 50% retracement of the move from August 2016 lows. Near term resistance is sited at 116.10 only over 116.20 reasserts upside.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Symmetry swing support at 120.40 defended sets sights on, 124.42 symmetry swing resistance. Near term resistance is sited at 122.76. A failure below 120.40 opens 118.70
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD rose after Trump’s speech, touching as high as $1,214.88 per ounce before finishing at $1,210.32, up for a fourth straight week. OIL settled up $1.05 (+2%) at $52.42 a barrel, ahead of a weekend meeting of OPEC and some non-OPEC producers in Vienna to establish a compliance mechanism to verify that producers are sticking to the scheduled output cuts. AUD climbed against the USD amid a rise in Australia’s 2-year government bond yield, The Chinese economy expanded 6.70% in 2016, slowing down from 6.90% in 2015. The world’s second largest economy has avoided an economic hard landing as the government held firm to its commitment to steer the economy toward a consumption driven model rather than relying on its exports oriented industries in its effort to create a sustainable growth path. CAD CPI and retail sales for December and November respectively released Friday, both were disappointing, with inflation coming in at 1.5%YOY for December (1.7% expected), and retail sales for November growing by just 0.2% m/m (0.5% expected). The lower inflation data refocuses the market on the BOC’s worries about the recent downtrend in inflation from this time last year.

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

Technical: Symmetry swing resistance sited at .7494 removed, the close above .7525 resets bullish attention on range highs towards .7800. The next upside objective is equidistant swing sited at .7631 Near term support is sited at symmetry swing level .7490 ahead of pivotal .7440
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Recapture of corrective channel opens a test of 1.3370, as 1.3190 supports potential to build a base for next leg higher. Only below 1.3140 reestablishes a more bearish tone.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1220 symmetry swing trend resistance test underway anticipated profit taking/sellers emerged on the initial test of this level. Near tern support is sited at 1190, failure here opens 1153
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Rejection from equality objective area at 55.30, a close below symmetry support at 50.68 confirms a medium term high and opens a retest of pivotal 49.00. Near term resistance is sited at 54.50.
Retail Sentiment: Bearish
Trading Take-away: Long

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