New York Forex Report: Political Headline Risk Elevated

New York Forex Report: Political Headline Risk Elevated

New York Forex Report: JPY is outperforming on the back of renewed risk aversion as market participants consider widespread weakness across global equity indices. GBP is underperforming in response to the deterioration in Brexit negotiations, while AUD soften on domestic data disappointment (industrial orders, Q3 GDP, respectively). CAD is up modestly heading into the Bank of Canada’s policy decision (statement only, hold expected, no MPR or press conference), and most of the remaining G10 currencies are trading flat from Tuesday’s close. Developed country bond yields are lower, gold and copper are consolidating their recent declines, and oil prices appear soft heading into inventory data. Wednesday’s U.S. release calendar is limited, headline risk is elevated in the context of U.S. government funding negotiations ahead of looming year-end deadlines.

NORTH AMERICA US PMI reading was downwardly revised to 54.5 in Nov final reading from 54.7 initial estimate. The reading constituted a retreat from 55.3 in Oct, but was nonetheless a solid figure in comparison with recent levels, supported by growth in new orders and employment. The ISM gauge on services sector also showed that growth moderated in Nov, as the index eased to 57.4 from 60.1 in Oct. This remains one of the highest levels in the last 12 months. In a separate report, US trade deficit widened to $ 48.7b in Oct from a shortfall of $43.5b previously.

EUROPE Eurozone PMI services climbed to a six month high of 56.2 in Nov as initially estimated, tracking positive growth outlook in the euro region. On the contrary, neighbouring UK reported much slower expansion in services activities in the same month, with the reading plunging more than expected to 53.8, as higher prices and a softer sterling amid Brexit uncertainties are dampening sentiments. Report on spending in the Eurozone indicated softer demand in Oct; retail sales fell 1.1% MoM in Oct, reversing the 0.8% increase in Sept while annually, sales rose a meagre 0.4% YoY in Oct after gaining 4.0% previously)

ASIA PMI readings were also largely positive in Asia. China Caixin services PMI edged up for the second straight month to 51.9 in November driven by bigger gains in employment and a rise in business expectations that points to continuous growth in the Chinese economy. Surveys by Nikkei also showed quicker expansion in Hong Kong and Singapore in November.

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

Technical: 1-3 Day View – 1.2092 cycle high vulnerable to retest, near term upside hurdle sited at 1.2010/30, near term support moves to 1.1810, below 1.18 suggests a false upside break an opens a retest of 1.17

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): Bearish – Medium Term (1-3 Weeks): Bullish

Technical: 1-3 Day View – 1.3460 achieved, through here opens prior cycle highs at 1.3650 near term support sited at 1.3340 only below 1.3230 concerns bullish bias

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): Bearish – Medium Term (1-3 Weeks): Neutral

Technical: 1-3 Day View – Initial 110.85 test prompts profit taking , near term resistance moves to 113.30, a breach of this level opens 114.70, below 11.45 opens 109.30/10 as the next downside objectives

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: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – retest of 134 range resistance underway a closing breach opens 136 as the primary upside objective. Only failure below 130.66 concerns bullish bias and opens pivotal 127.50.

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, a closing breach of 131 concerns the bullish basis.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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