New York Forex Report: GBP Short Squeeze

New York Forex Report: GBP Short Squeeze

New York Forex Report: Sterling has once again been the standout performer during the European session, as this weeks CFTC data demonstrated net short positioning is at record levels as such we are witnessing a decent short squeeze in thinly traded markets. From a data perspective the docket has been relatively quite this morning, headline releases were German Q2 GDP which came in inline with expectations at 3.1%. UK mortgage approvals came in broadly in line and couldn’t be considered the catalyst for the GBP bid. looking ahead US existing home sales will be watched as yesterdays new home sales were responsible for supporting the USD during the North American Session.

FX Majors: EUR Eurozone’s services and manufacturing PMIs this month showed that risks from Brexit was contained in the short term although it is still too early to judge the longer run impact on the 19 bloc nation. Services PMI rose to 53.1 (July: 52.9) while manufacturing PMI was only 0.2 point lower at 51.8. Both reports indicated that the economy is on steady growth path, easing ECB’s burden to increase stimulus at this juncture. Consumer confidence levels dropped slightly in August (-8.5 vs July: – 7.9) but underlying trend suggested that households continued to benefit from cheap oil and gradually improving labor-market conditions. GBP Demand for UK’s manufactured goods remained weak in August but a weaker Sterling provided some reprieve to overseas orders. According to Confederation of British industry, total orders index edged down to -5 this month (July: -4), dragged by Brexit jitters but the index tracking exports order recovered to the highest level since August 2014. JPY Japan plans to spend additional 45 billion US dollars to prop up its economy under a second extra budget for fiscal 2016, according to local media reported yesterday. The plan of extra budget is expected to be approved by the cabinet on Wednesday.

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): Bearish – 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): Neutral – 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 price rose on Tuesday due to the weaker US dollar and investors waiting for more Fed guidance on rates outlook in this Friday’s Jackson Hole symposium. The gold price increased by US$2.90 to US$1,340.60 on Tuesday. Oil prices jumped on Tuesday (23 Aug) after a Reuters report, citing unnamed sources, said Iran could support an effort by OPEC and Russia to freeze production and firm up prices. . AUD disappointing Aussie construction work and skilled vacancies are factoring into subdued trade, AUD hard to find momentum in thin liquidity as the market awaited comments by Fed Chair Janet Yellen later at the annual economic symposium in Jackson Hole . CAD OIL declines stalled out on Tuesday and the market tried its best to take advantage, looking to sell back into this latest USDCAD recovery

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: Bearish
Trading Take-away: Long

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. Below 1300 opens 1270
Retail Sentiment: Neutral
Trading Take-away: Neutral

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: Bearish
Trading Take-away: Long