New York Forex Report: Postions Pared Ahead of NFP Friday

New York Forex Report: Postions Pared Ahead of NFP Friday

New York Forex Report: The USD retains a defensive stance but is trading more narrowly mixed. The FOMC minutes failed to provide a trigger for renewed USD gains and absent indications of a quick follow up move to the December rate increase, US yields have edged lower; US Treasury’s remain a modest out-performer versus European bonds at least this morning. The Fed minutes themselves were hardly “dovish”, however, markets continue to view the USD dip since the start of the year as temporary, reflecting still thin trading conditions, position adjustment and some ongoing focus on China where efforts to stem upward pressure on USDCNY appear to be succeeding (short-term Chinese rates have surged and the offshore yuan has rallied strongly over the past two sessions, reflecting tightening liquidity conditions.Within the G10FX shere, the GBP is under-performing, despite positive domestic data, while most major currencies are flat to modestly higher against the USD only.

FX Majors: EUR Eurozone’s CPI climbed 1.10% YOY in December, marking tis quickest pace of price growth since September 2013 thanks to the 1.70% surge in Germany’s inflation rate on the back of oil price recovery. Auguring well with the recovery of the bloc, final reading of Markit services PMI hovered around the year’s high at 53.7 in December. GBP UK’s gauge of the construction sector expanded at its quickest pace in nine months. Construction PMI rose to 54.2 in December (November: 52.8), in tandem with relatively upbeat mortgage approvals for the month of November. Despite concerns over Brexit, mortgage approvals was unchanged at 67.5k in November which showed that downside risks were somewhat offset by low mortgage rates. Household spending climbed £0.2b to £1.9b as impact from softer increase in real wages remained contained. JPY Bank of Japan (BOJ) Governor Kuroda commented (via Bloomberg) on Wednesday (4 Jan) that the Japanese central bank will continue its easing program and that he is more confident Japan will make progress ending deflation and will make progress in 2017 on deflation.

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

Technical: A close over 1.0550 opens symmetry swing resistance sited at 1.0640 before pivotal 1.0720. Anticipate sellers to emerge at these levels, as this band of resistance caps upside bears target retest of 1.0338 lows.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Near term sellers still in charge while below 1.2350 targeting a retest of 1.2198 ahead of 1.21, only over 1.2440 suggest some selling relief.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The break below 116 opens pivotal 114.70 trend support, near term resistance is sited at 117, a close over this level resets bulls attention on 120 upside objective.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Buyers on the front foot while 121.60 supports on a closing basis, 124.42 symmetry swing resistance remains the upside objective
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD ended higher on Wednesday for the second straight session on the back of the weaker US dollar and higher inflation surprise from the Eurozone although the gains were tempered by the FOMC minutes which showed Fed officials grappling with “considerable uncertainty” about fiscal and other economic policies under the incoming Trump administration. This gold price increased by US$3.30 to close at US$1,165.30. OIL prices rebounded on Wednesday on the back of a slightly weaker US dollar and expectations by analysts that US crude inventory declined last week. The US Nymex WTI finished the session higher by US$0.93 to close at US$53.26. AUD services sector picked up steam in Australia. AiG performance services index surged to 57.7 in December, its highest level since Feb 2015. CAD subject to short-term fluctuations in oil prices and the impact, due to concerns about whether the implementation of OPEC production cuts.

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

Technical: While .7330 contains upside reactions .7092 AB=CD is the next downside objective. Over .7330 opens symmetry swing trend resistance sited at .7370
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1.3620 becomes the next upside objective. Only a close below 1.3250 concerns the bullish bias
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: As 1165 stems the upside correction bears target 1113. Over 1165 on a closing basis opens 1190.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Sharp 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.
Retail Sentiment: Bearish
Trading Take-away: Long

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