New York Forex Report: Risk Recovers Over European Morning

The initial market reaction to Friday’s terrorist attacks in France were mostly reversed over the European morning today with equities recovering and reduced safe-haven flows seeing JPY lower too. Market participants were initially concerned that the attacks could lead to a re-pricing of December lift-off expectations if investor sentiment was heavily impacted but so far these concerns seem to have been premature.  The US Dollar is firmer on the session, so too Oil meanwhile Copper continues to slip as concerns around Chinese demand and a growing surplus weigh on prices.

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

Fundamental: EURUSD was lower initially as European equity markets traded higher but was able to recover heading into the American cross-over as EuroZone CPI revealed the economic block mad its way back into positive inflation territory in October printing 0.1% against 0% expected.

Technical: While 1.0830/50 caps intraday upside corrections, bears target a test of 1.0560 next ahead of an assault on year to date lows. Only a close above 1.09 eases immediate downside pressure.

Interbank Flows: Bids 1.07 stops below. Offers 1.0830 Stops above.
Retail Sentiment: Bullish
Trading Take-away: Short 1.0830 targeting 1.0560

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

Fundamental: GBP remained firmly range-bound over the European morning. Rate still capped following last week’s comments from the BoE chief economist Andy Haldane that an interest rate hike by the Federal Reserve would not automatically lead to a response in Britain. He also said that Britain does not need a rate hike in the near future because wage growth has fizzled and the outlook for the global economy is uncertain.

Technical:  While 1.5250 contains upside reactions expect a test of of bids at 1.50 as the next bearish objective. Only a close above 1.53 eases immediate bearish bias

Interbank Flows: Bids 1.50 stops below. Offers 1.5250 stops above
Retail Sentiment: Bullish
Trading Take-away: Sell 1.5280 stops above 1.5350 Target 1.50

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

Fundamental: JPY weakened over the European morning as safe-haven flows were reversed coupled with the Japanese 3Q GDP reading which showed the country has once again slipped into a technical recession printing -0.8% vs -0.2% expected.

Technical: While 122.50/30 supports downside reactions, market structure remains bullish to test 2015 highs next

Interbank Flows: Bids 122 stops below. Offers 124 stops above
Retail Sentiment: Bearish
Trading Take-away: Long 122.50 stops below 122 target 125.50

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

Fundamental: JPY weakness saw EURJPY sharply higher over the European morning as the Euro was also boosted by a positive EZ CPI print.

Technical:  Equality corrective objective at 131.20 achieved, only a close above 133.50 eases immediate bearish pressure, while 132.50 caps upside reactions expect retest of 130.50 lows

Interbank Flows: Bids 130.50 stops below. Offers 132.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now

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

Fundamental: AUD was lower over the European morning due to a firmer USD and softer commodities prices. Traders look ahead to the RBA minutes release for their November meeting.

Technical: While .7170 caps corrective upside reactions expect a retest and breach of .7010 as bearish momentum builds for a retest of year to date lows. A close above .7200 eases bearish pressure

Interbank Flows: Bids .7000 stops below. Offers .7170 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now

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

Fundamental: Despite a small rebound in Oil price over the European morning USDCAD remains firm.  Last week Oil printed fresh 2 and a 1/2 month lows as concerns grow surrounding over-supply in the oil market.

Technical: Offers just above 1.33 stall the upside ratchet, bulls have the ball while 1.3220 supports intraday downside. However a close below 1.3220 would suggest a false upside break and a bull trap sustained weakness below 1.3220 confirms.

Interbank Flows: Bids 1.3250 stops below. Offers 1.3350 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now

uc2015-11-16 08_03_14-NetDania - NetStation

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