New York Forex Report: Sterling Shines on CPI Beat

New York Forex Report: Sterling Shines on CPI Beat

New York Forex Report: The USD is under pressure on the basis of both fundamentals and sentiment as market participants consider shifting political risk in France following last night’s debate and assess the outlook for relative central bank policy, specifically vs. the ECB and BoE. EUR and GBP are outperforming, the latter surging in response to stronger than expected CPI data. CHF are following closely however note the relative under performance for the growth-sensitive commodity currencies CAD, AUD and NZD. Safe havens gold and JPY are flat vs. the USD. The broader tone is one of modest risk appetite with gains across global equity indices.

FX Majors: EUR Centrist Macron seen most convincing in French election debate. Post debate polling relegates far-right leader Le Pen to third place of top five contenders according to reports from Reuters. Germany’s PPI rose 0.2% MoM in February, lifting annual inflation to 3.1% – the most since December 2011. Excluding energy the PPI was still up a relatively solid 2.2% YoY . GBP The average price of a UK property climbed to £310.1k in March, a mere increase of 2.30% YOY from a year ago. Property prices grew at the same pace in January and was at its slowest since April 2013 as rising inflation and slower wage growth dampened demand for houses. Asking prices for London properties however surged to an all-time high this month of £649.8k after under performing the rest of the country last year. JPY Japan’s markets were closed on Monday on account of the country’s Vernal Equinox public holiday. The JPY strengthened against the USD amid a risk-off mood during US and European trading sessions.

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

Technical: As 1.07 supports 1.0830 is the primary upside objective ahead of 1.0985 equidistant swing objective. A close back below 1.0620 would concern near term bullish bias
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: The breach of 1.2330 stems selling pressure as 1.23 supports 1.2450 become the next upside objective only below 1.2240 concerns near term bullish bias
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Failure below 113.80 concerns near term bullish bias as this level contains corrective moves, symmetry swing target at 112.20 becomes the downside objective.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 122.50 the primary upside objective achieved profit taking has developed. Only below 121 concerns near term bullish bias and opens a test of pivotal 120. As 121 survives on a closing basis expect a retest of 122.80
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD continued to rise, hitting a two-week peak on Monday as the dollar slumped to a six-week low after a G20 weekend summit that was dominated by the US administration’s protectionist stance on global trade. OIL fell despite news that OPEC was supportive of extending a six-month deal to cut output as investors continue to grapple with worries about growing US oil output and high inventories. Benchmark Brent crude futures briefly surged into positive territory, but edged back down again, after sources within the group said the Organization of the Petroleum Exporting Countries was considering extending production cuts into the second half of 2017. AUD Tone of the latest RBA minutes showed that outlook for the Australia economy has improved and “weakness in the September quarter was temporary.” Keeping the policy rate unchanged at record low of 1.50% was “consistent with sustainable growth and achieving the inflation target over time” but the central bank remained wary over build up risks associated with the housing market. Highlighting RBA’s concern, house price indicator suggested that prices rose 7.70% YoY in 4Q which was more than double the pace in 3Q. House prices increased at its quickest pace in one year. CAD Canadian government will release its budget on Wednesday. Finance Minister, Bill Morneau, said this weekend during G20, that he believes in keeping the debt-toGDP ratio on a declining path. With not much in terms of data today, expect broader USD sentiment and price action in Crude to drive price action in Funds for today. This week’s data releases include Retail Sales on Tuesday, and CPI on Friday.

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

Technical: Pivotal .7740 test achieved near term support is sited at .7630 as this level supports downside reactions bulls look for a test of weekly symmetry resistance sited at .7870

Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Symmetry swing objective sited at 1.3480 achieved, bulls target 1.3598 . Only a close below 1.33 concerns the near term bullish bias and opens a move back to test the base break at 1.32
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The close below 1215 invalidates bullish bias opening a retest of 1200 as 1225 caps upside corrections 1180 becomes the next downside objective, over 1233 suggests a broader correction to develop retesting 1241

Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Price is now testing primary trend line support from the February 2016 lows at 48.70 while this are supports there is an opportunity to retest range support at 51.00 as this level caps upside reactions bears target 45.20 as he next downside objective
Retail Sentiment: Bullish
Trading Take-away: Short

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