New York Forex Report: Pre-Holiday Profit Taking

New York Forex Report: Pre-Holiday Profit Taking

New York Forex Report: Post FOMC momentum in the USD has paused this morning, after the USD hit a fresh high against other major currencies yesterday amid a more hawkish Federal Reserve and a boost in US economic growth under President-elect Donald Trump. The USD posted its biggest daily percentage gain in nearly six months yesterday as such some profit taking has emerged through the European session as markets start to wind down for the holidays. EUR opened 1.0434 and crept up in European trade reaching 1.0472 as lower bund yields lead to more spread widening versus US Treasuries. JPY Has traded a narrow 117.92-118.43 range profit taking in Asia first sent spot below 118.00 but European traders have bid it back up above 118 as the New York session gets underway. GBP 1.2412-52 range, rebounding ahead of American open. EU parliament warns talks plan risk Brexit deal veto. UK business confidence recovers in November.

FX Majors: EUR Data bag from the Eurozone was mixed as stronger growth in the manufacturing sector was offset by softer growth in the services sector. Markit manufacturing PMI climbed to a record high of 54.9 in December (November: 53.7), contrasting the decline in services PMI in the same time period (December: 53.1 vs November: 53.8). GBP BOE officials voted unanimously to keep benchmark rate at 0.25%, government bond purchases at £435 billion and corporate bond purchases at up to £ 10 billion at yesterday’s MPC meeting. After cutting rate by 25 bps to the current record low level in August, policy can now “respond in either direction” depending on the change in economic conditions. However, the recent appreciation in Sterling ‘would result in a slightly lower path for inflation than envisaged in the November Inflation Report, though it is still likely to overshoot the target later in 2017 and through 2018’. Inflation is expected to rise to the targeted 2.00% within 6 months. On the data front, retail sales unexpectedly rose 0.20% MOM in November (October: revised to +1.80% MOM) as consumers splurged on electronics and household goods ahead of the festive seasons. JPY Japan’s machine tool orders plunged 5.60% YOY in November. Despite softening from the 8.90% YOY drop in October, details indicated that foreign demand continue to weighed heavily on total orders, underscoring weak recovery in global capital spending growth.

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

Technical: 1.0424 symmetry swing objective achieved as 1.05 now acts as resistance bears target 1.03 as the next downside objective. A close over 1.0880 is required to curb bearish spirits

Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Symmetry swing objective at 1.24 achieved. As 1.2550 caps upside reactions bears target 1.23 as the next downside objective. Only a close over 1.2730 resets attention on upside objectives
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Near term support is sited at the 116 as this area supports bulls target 120 as the next upside objective.Only a close below 112.50 would suggest a broader correction.

Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: As 121.50 supports scope for a test of pivotal symmetry swing resistance sited at 124.42. Only below 120 concerns bullish thesis.
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD Setbacks in this market have been extreme over the past few weeks, with the weakness potentially compromising any possibility for a longer term base OIL OPEC has singnalled larger 2017 oil supplys unless cuts are implemented. AUD found little help against the USD after the better-than-expected Australian jobs report. Australian employment rose a net 39,100 in November, versus forecasts of a 20,000 gain. CAD weakened to a two-week low against the USD before paring some losses, stressed by broader gains for the USD and weaker-than-expected domestic manufacturing figures.The Bank of Canada which is widely expected to hold rates steady throughout 2017, with the risk of a sharp correction in Canada’s housing market and financial stress on households increasing in the last six months

AUDUSD
Outlook: Short Term (1-3 Days): Bearish – 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 7530/50 as this levels contains the upside reaction there is potential for resumption of downside pressure
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Price rotating lower to test pivotal symmetry support at 1.3098 ahead of longer term channel support sited at 1.3050. Over 1.34 stabilises the pair and suggest a return to focus on upside objectives
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1149 achieved as 1155 caps upside reactions bear set sights on 1113 symmetry swing objective.. A close over 1200 suggests 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): Bullish

Technical: Near term support sited at 51.69 removed correction now targets symmetry swing support at 50.00, a close below 47.00 would concern the bulls.
Retail Sentiment: Bearish
Trading Take-away: Sidelines