New York Forex Report: OPEC Headlines & Month End Flows Add Volatility

New York Forex Report: OPEC Headlines & Month End Flows Add Volatility

New York Forex Report: Month-end flows and the OPEC meeting in Vienna are set to keep the markets active today. Oil prices have surged following reports overnight suggesting that the main players are close to an agreement on a production cut; headlines suggest OPEC producers are aiming for an output ceiling of 32.5 mn bpd and hope non-OPEC producers will cut another 600k bpd. Iran (and others) may be exempt from the deal. This would be positive for crude but the headlines likely represent a best case scenario for crude at this point and, with WTI up 6.5% on the day, just above $48/bbl, you might think that much of the good news is already priced in here. More broadly, it’s been a poor session for commodities it should be noted, with industrial metals down sharply and precious metals softer. Global stocks are firmer while developed market bonds are mixed, with US yields firmer on higher energy. The G10FX space reflects the influence of oil, with the NOK out-performing while the JPY is under-performing on the session against a generally mixed USD.

FX Majors: EUR The barrage of data from Eurozone was mixed. Broad economic confidence indicator surged to the highest level this year, climbing 0.1 ppt to 106.5 in November. The reading reflected rising household confidence as economic momentum gathered steam. While consumers were generally more upbeat about the economy this month, another confidence gauge showed that manufacturers were less optimistic. Tracking confidence level in the manufacturing sector, the business climate index slipped to 0.42 in November (October: 0.55). GBP The number of mortgage loans approved in the UK rose to 67.5k in October from 63.6k in September. Approval was the highest in seven months, according to a report by the Bank of England. Effective interest rate on new home loans dropped 11bps to 2.16% last month, supporting activities in the housing market and alleviating dampening investors demand caused by concerns over Brexit negotiation. Net consumer credit climbed £ 1.6 billion last month (September: £ 1.5 billion), indicating consumer willingness to spend. JPY Japanese households were still tightening their purse strings even as unemployment rate remained at its lowest in two decades. Unemployment rate was unchanged at 3.00% in October but despite a tighter job market, household spending dropped 0.40% YOY in October (September: -2.10% YOY). Retail sales reading was equally disappointing, falling 0.10% YOY last month (September: – 1.70% YOY).

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

Technical: Bearish attention remains towards 2015 lows at 1.0463 ahead of the larger weekly AB=CD objective at 1.0423. Near term resistance sited at 1.0650/80 a break here targets a retest of 1.0740 , medium term 1.0850 is a key upside hurdle which will need to be captured on a closing basis to stabilise the pair.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Bears target symmetry swing objective at 1.2270 as 1.2510 contains upside reactions, over 1.2520 opens an equidistant swing objective of 1.2570 as this level stalls correction there is a window for a resumption of downside pressure. Medium term hurdle at 1.2670
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 115.59 is the next upside objective representing the 61.8% retracement of the 2015/16 decline. A breach of 111.07 would suggest a broader correction to the advance opening a move back to test symmetry swing support at 109.60
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: While symmetry swing support at 118.80 survives on a closing basis, the advance looks set to test 121 equidistant swing objective. A break back below 118.45 opens 116.20 failure here would concern the bullish thesis.
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD fell despite a lower dollar overnight, with the precious metal finishing off by 0.47% to 1,188.31 an ounce. OIL settled down $1.85, or 3.9%, at $45.23 a barrel on doubts that the OPEC meeting today may fail to reach a deal or produce one that is unworkable. AUD building approvals unexpectedly fell, at a double-digit pace of 12.6% MOM and 24.9% YOY in October, reaffirming continuous sluggish prospects of the housing market. CAD weakened slightly against the US dollar as oil tumbled on doubts that the Organisation of the Petroleum Exporting Countries will agree a deal to cut crude output. Canada’s GDP figures for the third quarter due today. Economists expect growth of 3.4%, up from a 1.6% drop in the second quarter.

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

Technical: .7092 AB=CD remains the downside objective. Near term resistance sited at .7440 has been eroded the correction should now challenge pivotal 7530 as this levels contains the upside reaction there is potential for resumption of downside pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Price continues to consolidate in a bullish pattern, the profit taking pullback tests and holds symmetry support at 1.3407, as this area contains the pullback 1.3620 becomes the next upside objective. Only a close below 1.3250 concerns the bullish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As equidistant swing objective sited at 1202 contains upside reactions bears target 1149 as the next downside objective. A close over 1220 suggest broader correction to the recent decline.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Offers at 48.92 equidistant swing resistance currently contains upside reaction there remains an opportunity for a move to the downside targeting symmetry swing objective at 39.78. Interim symmetry support sited at 43.69. A breach of 49.20 opens a quick test of offers above 50.00.
Retail Sentiment: Bearish
Trading Take-away: Sidelines