New York Forex Report: Mario Time

New York Forex Report: Mario Time

New York Forex Report: If Chair Yellen was worried about a slump in employment data, the ADP employment release may have calmed some nerves coming in at a blockbuster 298k versus 187k expected. While this has had a chequered past in correlation with NFP, the markets are in belief mode, seeing US yields extend recent moves across the curve. The USD benefitted on the back of this, which has seen EURUSD slide back towards the recently steadfast 1.0500 support region as we head into the ECB press conference today. Euro area headline inflation climbed to 2% in February, which means that it is now above the ECB’s goal of “close to but below 2%”. Despite that, it is likely that President Draghi will play down its significance, because the rises in recent months have been driven almost entirely by energy prices. Underlying domestic inflationary pressures remain subdued, with the ‘core’ rate excluding food and energy remaining below 1%. The ECB has already announced that from next month it will scale back its monthly purchases to €60bn a month until year end, from €80bn previously. As expected policy left broadly unchanged at today’s meeting. President Draghi’s tone at the post meeting press conference is likely to remain cautious, with risks to growth seen remaining on the downside partly relating to political uncertainties including upcoming French elections. Any removal of stimulus beyond the previously planned reduction would therefore be premature. Providing the euro area economic environment continues to improve we expect the ECB to signal a gradual ‘tapering’ of its asset purchases next year in either September or October and for policy rates to rise thereafter.

FX Majors: EUR The European Central Bank (ECB) meets today. Policy makers are widely expected to keep interest rates and its QE program unchanged at this meeting. A recent Bloomberg survey showed that most economists expect a status quo till at least June before ECB upgrades their risk assessment. GBP In the UK, RICS house price balance index was unchanged at 24% in February as growth in house prices stalled. Housing property sector in the UK were starting to show signs of slowdown in February as impact of Brexit and rising cost of living dampened demand. JPY Japan’s leading index rose to a nineteen-month high of 105.5 in January (December: 104.9) while Eco Watchers survey outlook ticked up to 50.6 in February (January: 49.4), indicating an improvement in economic outlook in the near future. Showing a diverging trend, coincident index slipped to 114.9 in January (December: 115.6) while Eco Watchers current index dropped to 48.6 in February (January: 49.8). Both pointed to a murkier outlook on household and business sentiment last month.

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

Technical: A closing breach of 1.05 opens a move to 1.0450 next, only over 1.0650 arrests near term bearish bias and resets attention on upside objectives
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1.22 downside objective achieved, as 1.2330 continues to cap corrections 1.1990 becomes the next downside objective, only over 1.25 stems selling pressure
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Near term resistance sited at 113.80 removed and now becomes near term support, a close over 114.50 reasserts upside targets primarily at 115.50. Failure below 113.40 opens 112.80 as the next downside objective
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Near term resistance sited at 120.50 removed and now becomes near term support, only a close over 121.50 stems near term selling pressure and resets focus on upside objective. Failure below 120.20 opens 119.30
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD finished lower for a third straight day, by $7.55 (- 0.62%) per ounce to $1,208.31. OIL tumbled 5.4% on Wednesday to finish at $50.28 per barrel, the lowest levels this year after government data showed a surge in U.S crude oil inventories to 8.2m barrels for the week ending 3 March, higher than estimates of 2m barrels. AUD China’s exports unexpectedly contracted in Feb in USD terms, falling by 1.3% y/y against market’s forecast of a double-digit growth. Exports to US, Japan, EU, Australia and India contracted in the month. Meanwhile, imports surged 38.1% y/y in Feb, leading to a rare trade deficit in China amounting to US$9.15bn in the month – the first deficit since Feb 2014. AUD failed to hold onto early gains amid higher Australian 2-year government bond yields CAD D is weaker as the strong USD and weak oil prices have combined to lower the CAD against the USD.

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

Technical: .7500 downside objective achieved as .7570 caps upside corrections .7550 becomes the next downside objective, only over .7650 resets attention on upside targets
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Symmetry swing objective sited at 1.3480 achieved, as 1.3390 supports bulls target 1.3598 . Only a close below 1.33 concerns the near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: The close below 1215 invalidates bullish bias opening a retest of 1200 as 1225 caps upside corrections 1180 becomes the next downside objective
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: As 52.10 caps upside corrections expect a grind lower to test 49.10 only a snap-back over 53 suggests a false downside range break an a return to recent 53.00/55.00 range
Retail Sentiment: Neutral
Trading Take-away: Neutral

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