New York Forex Report: Sterling Shines

New York Forex Report: Sterling Shines

New York Forex Report: Risk-sentiment remains buoyed with a number of equity markets setting new all-time highs, including the S&P500 futures, while the USD and US yields have extended their turnaround. While there is potential for the USD to stage a meaningful correction from current levels into Q4, in the short-term markets need to see more evidence to prove this isn’t just a re-jigging of positions ahead of the key data at the end of the week and the Fed meeting next week. The stand out performer this morning has been sterling which benefited from robust inflation data, August Core CPI YoY 2.7% vs 2.4%, 2.5% forecast the data was the catalyst for GBP to print new year to date highs above 1.3260. Over the coming months, markets now expect inflation to rise above 3%, prompting an exchange of letters between BoE Governor Carney and Chancellor Hammond. However, for the majority on the MPC the key metric is likely to be domestic inflation, which means that tomorrow’s employment and wage growth data will also generate considerable interest.

NORTH AMERICA Inflation expectations keeps falling in US as American consumers in August predicted that inflation would stand at just 3% in three years’ time, marking the lowest level in the four-year history of a monthly survey conducted by the Federal Reserve Bank of New York.

EUROPE Bank of France Ind. Sentiment survey for August unexpectedly eased lower to 104 9from 105 in July) and missed the forecast for a slight uptick to 106. Italian July industrial production increased 0.1%MoM after expanding 1.1%MoM in June. This was better than expectations, and markets expected a -0.4%MoM decline. After more than eight hours of debate on Monday, the UK parliament narrowly voted 326 to 290 in favour of the EU withdrawal bill, and against the opposition Labour Party’s attempt to block the EU withdrawal bill. Labour Party had wanted the government to amend parts of the EU withdrawal bill because this legislation is contentious as it contains so-called Henry VIII powers that allow ministers to make changes to existing laws, bypassing normal scrutiny by Parliament

ASIA Japan’s dataflow continue to build on recent upsides. Demand for machines sank further in Jul, but demand for tooling picked up in August. Machine orders contracted 7.5% YoY in July after falling 5.2% in June. Meanwhile, machine tool orders surged 36.3% in Aug early estimate, up from 28.0% in July

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

Technical: 1-3 Day View – 1.2070 achieved as 1.1980/60 acts as near term support 1.2165 becomes the next upside objective ahead of 1.2260 only below 1.1810 concerns the near term bullish bias

1-3 Week View – 1.20 achieved bulls look for a test of 1.2130 as the next upside objective. Weekly close below 1.16 neutralises bullish objectives opening a test of 1.14
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – As 1.3130 supports price there is potential for a platform to test the 1.3260’s former cycle highs, only below 1.2910 opens a move back to 1.2850

1-3 Week View – The weekly close above 1.3045 targets the broader symmetry swing objective sited at 1.3263 only a close back below 1.28 would jeopardise the bullish advance.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Price is poised to test resistance at 109.72 as offers above 110 contain corrections bears target a retest of current cycle lows en route to the primary downside objective at 103. Only a close over 111 stabilises the pair

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: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – Upside objectives at 133 back in play, below 129.50 concerns bullish bias and opens the door to further test of bids back at 127.60 near term resistance sited at 131.20

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, 129.44 upside objective achieves as 128 supports bulls look for a move to test 133.36 as the broader upside objective.
Retail Sentiment: Bearish
Trading Take-away: Long

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