New York Forex Report: Market Looks To Minutes

New York Forex Report: Market Looks To Minutes

New York Forex Report: The IMF released their latest assessment of the world economy, increasing their growth expectations to 3.6% this year and 3.7% next (an increase of 0.1% in both), but with a distinct warning to not become complacent in regards to the recovery. They suggest the medium-term risks are biased to the downside, with tightening financial conditions, low inflation and protectionist policies among their concerns. On that last note, we start the next round of NAFTA talks today. In the Eurozone, focus is on ECB Chief Economist Peter Praet’s comments at a conference on “European Exit Strategies”. In particular, markets will be looking for clues on the potential trade-off in future QE policy calibration between the duration of the programme and the monthly size of asset purchases. With little data again today, the ‘key’ event is the FOMC minutes tonight. Markets believe policymakers are likely to ‘look through’ the noise in weather-affected data and focus instead on the underlying picture, which has remained robust. The updated ‘dot plot’ showed no change to the expectation of one further hike this year.

NORTH AMERICA More voices of dissent of late from Fed speak, as Minneapolis Fed President Kashkari inferred that policy tightening should be on hold until inflation meets the Fed’s target of 2%. His “preference would be not to raise rates again” until core PCE inflation “hit 2%”. He believes that subdued inflation is due to “additional domestic labour market slack and falling inflation expectations”, implying that there is room for further tightening in the labour market before prices pick up. One piece of data from the US and it turned out softer than expected. The NFIB survey of confidence level amongst small businesses showed a dimmer view, with the index dipping to 103.0 in September form 105.3.

EUROPE EUR outperformed across the board as Catalan President Puigdemont did not make a declaration of independence and sought further talks with President Rajoy. In the euro area most of the focus was on the factory sector. French industrial production fell a disappointing 0.3% MoM in August, albeit after an upwardly revised 0.8% MoM gain in July. Both headline industrial production and manufacturing output were up 1.1% YoY. By contrast, Italy’s industrial production rose a much stronger than expected 1.2% m/m in August to be up 5.7% YoY. In the UK, total industrial production rose 0.2% MoM in August, matching expectations. Less positive was a widening of the UK’s trade deficit to GBP5.6bn in August – double expectations – as a 0.6% MoM rise in exports was outpaced by a 3.2% MoM rise in imports

ASIA Japan Eco Watcher’s gauge on current economic conditions and outlook were mixed in September. Respondents were more confident in current conditions, lifting the index to 51.3, a 9-month high, from 49.7 in August. However, respondents were a tad dimmer on outlook, which led the index to dip to 51.0 from 51.1 in August. Demand for machinery improved in August, as orders rebounded with a 4.4% YoY growth after slumping 7.5% in July.

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

Technical: 1-3 Day View – Range support 1.1830/60 now becomes resistance the initial test of pivotal 1.1660 prompted a profit taking pull back. As this area caps the correction expect a move back to test bids towards 1.17. Over 1.1920 opens a retest of current cycle highs

1-3 Week View – 1.2130 the next upside objective. Weekly close below 1.16 neutralises bullish objectives opening a test of 1.14
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Profit taking pull back on the initial test of trend support at 1.3060 extends to squeeze shorts testing 1.3220 resistance a close over this level targets 1.3320 next.

1-3 Week View – 1.3263 achieved as this acts as support 1.3836 is the next upside objective only a close back below 1.30 would jeopardise the bullish advance.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Near term support is sited at 112.00 as this area attracts bids expect a test of offers over 113.50 a sustained break of 112 opens a move to test 110.85 base break out level..

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: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Breach of 133 supports delays a test of 136.10 as 133 now acts as resistance, expect a retest of 1.32/1.3150 support zone only below 131 concerns the bullish bias opening a move back to 129 base.

1-3 Week View – 136.10 is the principle upside objective as this area caps the current advance expect a retest of 131.50 to set a base for the next leg higher, only a closing breach of 127 concerns the bullish basis.
Retail Sentiment: Bearish
Trading Take-away: Long

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