New York Forex Report: Haldane; The New ‘Unreliable Boyfriend’ at BoE

New York Forex Report: Haldane; The New ‘Unreliable Boyfriend’ at BoE

New York Forex Report: There were no data reports of note from the Eurozone today and the EUR continues to struggle to extend from recent ranges as short (and longer) term rate spreads remain widely in favour of the USD (2Y yield spread remains near 200 bps). European stocks have flattened somewhat after gaining strongly earlier in the Spring and support the EUR gains earlier in the year. GBP Comments from BoE economist Haldane, a known Dove, that he favoured removing some stimulus echoes the sentiment revealed by last week’s 5-3 split on holding policy unchanged at the BoE’s latest policy meeting and stands in contrast to BoE Bank Head Carney who struck a far more dovish tone in his speech yesterday, Haldane’s comments have led to a sharp reversal in GBPUSD whipsawing traders. JPY Domestic events and releases have had a limited impact on JPY, with no material response to either the BoJ minutes (from April) or the most recent speech from BoJ Governor Kuroda. The Governor . struck an upbeat tone on growth while reaffirming the need to maintain ‘powerful easing’ in order to reach the BoJ’s goal of price stability

USD Fed speeches overnight reiterated policy makers concerns on slower than anticipated increase in price growth. Fed Kaplan said that he wanted further evidence that the recent weakness was transitory before voting to hike rate again. Fed Evans foresees hurdles for inflation to climb back up to the Fed 2.0% target. On the contrary, Vice Chair Fischer said low inflation may lead to “high and rising” home prices but made no comments on economic outlook or monetary policy

EUR ECB’s current account surplus narrowed to €21.5 billion in April (March: €35.7 billion) mostly due to smaller surplus from Germany (April: €15.1 billion vs March: €31.1 billion) which offset bigger surplus from Italy (April: €3.4 billion vs March: €3.1 billion) and smaller deficits from France (April: -€2.6 billion vs March: -€3.4 billion) .

GBP underperforming in response to BoE Governor Carney’s Mansion House speech as he called for patience in adjusting policy. The speech provided a clear contrast to the recent shift at the MPC as departing member Forbes was recently joined by an additional two members in calling for hikes at the last week’s meeting. The Governor has specifically spoken to the need to see other components of demand offsetting weaker consumption and for the broader response to Brexit. A reminder that Chief Economist Haldane speaks today

JPY BOJ Minutes of April 26-27 Meeting this morning showed that the MPM members agreed that JGB purchases will fluctuate under the yield curve control policy while one member opined that the BOJ bond buying cannot continue into 2018 unless BOJ starts to reduce JGB purchases now.

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

Technical: 1-3 Day View – The near term downside objective sited at 1.1125 symmetry swing support has been achieved expect profit taking pause as 1.12 contains upside corrections expect a test of equidistant swing and channel support sited at 1.1040. Over 1.12 again delays downside attempts and retains range environment.

1-3 Week View – While 1.0830 supports 114.30 becomes the primary upside objective. A weekly close over 1.1450 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Perceived corrective price action played out leaving 1.2639 vulnerable, this support has now been removed, as 1.2660 contains upside attempts 1.2450 becomes the downside magnet, only over 1.2750 arrests bearish pressure.

1-3 Week View – The weekly failure to close above 1.3045 ahead of the broader symmetry swing objective sited at 1.3238 suggest underlying weakness persists 1.2450 becomes pivotal for the medium term perspective
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – A daily closing breach of 111.80 level would reset focus on upside objectives principally 113.78, near term support is now sited at 110.80, only below 110.30 would arrest the advance.

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: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Bullish consolidation targets 129.44 as the medium term upside objective, near term upside objective of 126.84 as 123.90 supports, only below 122 concerns near term bullish bias, opening a move to test 121.36.

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, resetting focus on pivotal 124.40 a weekly breach of this level opens 129.44 as the broader upside objective
Retail Sentiment: Neutral
Trading Take-away: Neutral

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