New York Forex Report: Pound Pop & Drop on Deal

New York Forex Report: Pound Pop & Drop on Deal

New York Forex Report: GBP has surged higher in the last 24 hours on expectations that a deal will finally be done between the UK and EU, allowing the negotiations to move onto phase two of the talks around trade. That deal was announced this morning and the buy the rumour sell the fact fade has set in, it is difficult to see what will drive GBP significantly higher on this theme. Meanwhile, Chinese trade data surprised on the topside, with exports and imports stronger than expected. This is on the back of robust PMI data over the last week and flies in the face of the metals sell-off this week as the market looks into 2018 and wary of whether China can keep up this pace of demand. The main event this afternoon is obviously the US labour market report. It rose by 261k in October, its biggest monthly gain this year, reflecting in part a post-hurricane rebound, with the unemployment rate falling again to a new 17-year low of 4.1%. Economists are, looking for 190k in the headline today, while the unemployment rate should remain at 4.1%. Watchers look for earnings growth to pick-up, forecasting a monthly gain of 0.3%, which should pull up the annual rate to 2.7% from 2.4%

NORTH AMERICA US initial jobless claims were encouragingly lower for the week ending 2nd December at 236k, down from the previous week of 238k. Continuing claims also declined to 1908k for the week ended 25th Nov, down from the upward revised previous week print of 1960k. For today, look out for US nonfarm payrolls and unemployment data.

EUROPE Eurozone’s 3Q economic growth was affirmed at 0.6% QoQ, dipping slightly from 0.7% in 2Q. The headline figure was marred by softer expansion in household consumption (3Q: +0.3% vs 2Q: +0.5%) and government expenditure (3Q: +0.2% vs 2Q: +0.5%), both of which underperformed market estimates. Annually, there was upward revision to 3Q GDP growth from 2.5% YoY to 2.6% YoY, suggesting that outlook remains firm. House prices in the UK climbed more than expected in Nov, according to Halifax survey. Values rose 0.5% MoM, up from 0.3% increase previously as buyers compete for a limited number of houses for sale

ASIA Japan’s leading index dipped to 106.1 in Oct early estimates, down from 106.4, while the coincident index inched higher to 116.5 in the same month, up from 116.2. Both measures a mixture of indicators such as industrial production, orders of durable consumer goods, retail sales value, job offers, machinery orders and consumer confidence, among others. The recent 3-month trend indicates that both may have peaked, suggesting that economic activity may be moderating going forward. Meanwhile, GDP grew more than initially estimated, rising 0.6% in 3Q final reading after expanding at the same pace in 2Q. Growth was driven by strong business spending that offset continued contraction in private consumption. Annually, economic growth eased to 2.5% YoY in 3Q, down from 2.9% in 2Q.

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

Technical: 1-3 Day View – Support at 1.18 removed, sustained push sub 1.1770 suggests further weakness to test critical 1.17 a reversal here encourage another run at 1.20, failure here opens 1.16

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): Neutral – 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: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Initial 110.85 test prompts short squeeze , near term resistance moves to 113.30/60, a breach of this level opens 114.70, below 11.73 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: Bearish
Trading Take-away: Long

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

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: Bearish
Trading Take-away: Long

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