New York Forex Report: Markets Play Defence Into Month End & Trump

New York Forex Report: Markets Play Defence Into Month End & Trump

New York Forex Report: The USD is lower for the most part in quiet trade as investors await month-end flows (expected to be predominantly USD selling), a raft of US data (GDP revisions, trade, wholesale inventories, house prices, Chicago PMI, consumer confidence), Fed speakers and President Trump’s address to Congress this evening. Markets will expect more clarity on the Trump administration’s trade, fiscal and deregulation plans (note Mr. Trump is appearing on Fox TV in throughout this afternoon) but relatively low overnight option volatility for EURUSD suggest markets are not expecting (or are well-prepared for) a significant move in the market in response to this high profile event. If anything, mixed European stocks and US futures, a bid for US Treasury bonds and relative strength in the JPY and the CHF so far on the day suggest a more defensive approach to the markets in general.

FX Majors: EUR Eurozone consumers and businesses are turning more optimistic over economic outlook. Economic confidence index edged up to 108.0 in February (January: 107.9), climbing to the highest level since March 2011. Business climate indicator surged to a 68-month high of 0.82 in February (January: 0.76) while a gauge of consumer confidence remained steady at -6.2 in February. GBP weaker on news that the UK government may be preparing for another Scottish independence referendum. In Brexit news, the next stage of Brexit kicked off yesterday as the House of Lords gather to begin the process on voting through the article 50 bill. This part is called the Committee Stage, where each line of the bill gets voted on. The last sessions were for any changes and amendments to be put forward and they will be gathered in order and discussions will start again. JPY Japan’s industrial production slipped 0.80% MoM in January followed a 0.70% MOM increase in December. On a brighter note, retail sales print suggest that household spending gathered steam as sales increased 0.50% MoM last month after a 1.60% MoM drop in December.

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

Technical: Expected retest of 1.0521 base plays out forming interim double bottom, a closing breach opens a move to 1.0450 next, only over 1.0650 arrests bear term bearish bias.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Range trade persists, equidistant swing objective at 1.2679 capping corrective advance. Near term support sited at 1.2345 survives on a closing basis with range resistance sited at 1.2580
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Only a 112 sustained breach will open 110.70 symmetry swing support underpinned by 109.90 50% retracement of the move from August 2016 lows. Near term resistance sited at 113.80, a close over 114.50 reasserts upside targets primarily at 115.50
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 118.70 downside objective achieved as near term resistance sited at 120.50 caps corrections bears target 117.69 next, only a close over 121.50 stems near term selling pressure.
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD gold hit a new three and a month high of $1,263.93 on Monday before a round of swift profit taking took the bullion $10 lower to $1252.73, closing lower by 0.35%. OIL crude was little changed on Monday, with futures paring earlier gains of more than 1% to settle up 6 cents at $54.05. This comes after a CFTC report on last Friday that investors raised their bullish U.S. crude futures and options positions to the highest on record in the week to 21 February. AUD Australia HIA new home sales dropped 2.20% MOM in January after a 0.20% MOM increase in December. On the other hand, current account balance narrowed to AUD 3.9 billion (previous: AUD 11.40 billion) amid the increase in goods & services trade (AUD 4.70 billion). CAD The major risk event this week for CAD is the Bank of Canada rate decision is coming up this Wednesday, unchanged policy is the consensus. Overall, the market consensus for Canadian rate hikes is at a miniscule 2 bps over the next 12 months according to the OIS

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

Technical: The next upside objective is sited at .7750 as price continues to consolidate at elevated levels. Near term support is sited at symmetry swing level .7600 ahead of pivotal .7449
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Over 1.3210 opens a move back to test 1.3370.Price action remains erratic as price attempts to base above pivotal 1.30. Near term support is sited at 1.3050, failure here opens a retest of 1.2967
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: As 1225 acts as support bulls target symmetry swing resistance sited at 1299, only a close below 1200 concerns near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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