New York Forex Report: NFP Volatility Ahead

New York Forex Report: NFP Volatility Ahead

New York Forex Report: FX markets are clearly on election watch. The USD is mixed to slightly lower against its major currency peers nut overall movement is very limited; the GBP retains a firm undertone following the high court/Brexit/BoE comments Thursday, while the NZD’s yield story seems less appealing this morning, leaving it as a minor under-performer. The “usual” volatility around the US NFP data is likely to be absent today. Barring a significant downside surprise, which casts any sort of doubt over the Fed moving rates up in December, markets are unlikely to pay too much attention to the numbers.

FX Majors: EUR showed limited movement on Thursday, following the gains on Wednesday, and closed just above 1.1100 handle. On the release front, Eurozone employment rate came in at 10%, in line with the forecast. Markets remain nervous about Brexit fallout, and negotiations between Britain and the EU are expected to be lengthy and arduous GBP BOE held interest rates at 0.25% but added about £20 billion of debt to its corporate bond shopping lists. In addition, the central bank said that it will stay pat with its current policy for the rest of the year. Inflation is forecasted to rise to 1.30% in 4Q16 (previous: 1.20%), 2.70% in 4Q17 (previous: 2.00%), 2.70% in 4Q18 (previous: 2.40%) and eases to 2.50% in 4Q19 which was unchanged from previous forecast. Growth was also revised upward in the near term but impact of Brexit is expected to drag growth in 2018. Growth projection was 2.20% this year (previous: 2.00%), 1.40% next year (previous: 0.80%) and 1.50% in 2018 (previous: 1.80%). Data wise, UK’s services PMI increased to 54.5 in October (September: 52.6), climbing to the highest level in nine months, leaving rooms for BOE to refrain from easing policy further this year. JPY JGB prices are slightly higher across the curve, though the majority of domestic institutional investors seem to be reluctant to follow higher prices ahead of the US non-farm payroll data due today and next Tuesday’s US presidential election.

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

Technical: Expect advance to find offers on initial test of 1.1120/30, expect former 1.1030 resistance to act as support, only over 1.1230 eases bearish bias with 1.1304 the symmetry swing upside objective
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Medium term resistance is sited at 1.24920. Only a close over 1.25 eases bearish pressure. Interim support is sited at 1.2260/80
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 103.80 prior support now resistance, a close below 102.80 neutralises bullish bias, 101.28 becomes the downside symmetry swing objective.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Upside attention on 116.20 as the primary upside objective with in in the broader 112-116 range. A tops side expansion through 116 opens 121 equidistant swing objective. Back below 114 opens 112 again.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD firmed above the key 1,300 level to close 1302.70 per ounce, helped by a lower dollar and intensifying concerns over the outcome of the U.S elections. OIL hit fresh 5-week intraday lows before settling down 68 cents (-1.5%) at $44.66 per barrel over supply glut concerns. AUD Australia’s services sector rebounded in October, signaling broader economic recovery last month. Services sector PMI rose to 50.5 in October (September: 48.9), the highest in three months. An earlier release showed that the manufacturing sector was back on expansionary phase last month, painting the picture of quicker growth in the final quarter of the year. Trade deficits narrowed to AUD Australia is expected to expand around 2.50- 3.50% by June 2017 and June 2018 but quicken to 3.00- 4.00% by December 2018, according to the freshly released quarterly monetary policy statement. Growth forecast was little changed from the previous forecast except for June 2018, which the central bank forecasted quicker growth of 3.0-4.0%. Inflation is forecasted to rise at the same pace of 1.50%-2.50% in June 2017, June 2018 and December 2018, unchanged from August forecast. On the data front, retail sales climbed 0.60% MOM in September (August: +0.40% MOM), its quickest pace in eleven months. CAD is the only developed currency into Friday that has under performed against the US Dollar over the past week. The relative weakness comes primarily from a sharp pullback in the price of OIL, though tensions ahead of the US election and Canada’s proximity to the US have also made the Canadian Dollar less attractive.

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

Technical: AUD continues to rotates in a contracting range with .7730 capping upside and .7500 containing downside reactions, a breach of the lower end of the range opens .7412 symmetry support. Through .7750 opens .7830 on the upside.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1.3360 equidistant AB=CD upside objective achieved as 1.3230 supports bulls target a move to 1.35, only below 1.2960 threatens this objective and suggests a test of pivotal 1.2820.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Anticipate test of 1229 symmetry swing support failure here lets bears target 1200 as the next downside objective, near term resistance is sited at pivotal 1300.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Equidistant swing objective sited at 52.40 is the primary upside objective. The failure at 49.50 has opened symmetry swing support at 46.03 which has also been breached opening 42.73 as the next downside objective ahead of 39.78
Retail Sentiment: Bullish
Trading Take-away: Short