New York Forex Report: Sterling Slides on Downbeat Data

New York Forex Report: Sterling Slides on Downbeat Data

New York Forex Report: Markets seem to have moved into protectionist mode, whether that’s a P&L protection or a more balanced portfolio due to rising risks around European elections. US, European and UK yields across their curves have come back under pressure in this regard. All eyes then on the meeting between Japan’s PM Abe and President Trump and of course, twitter. The RBA left their rates unchanged overnight, highlighting the robustness of the Chinese economy in the second half of 2016, due to infrastructure and construction spending boosting raw material commodity prices, which has helped the Australian economy recover, somewhat. Governor Lowe said they expect inflation to be back to their 2% target this year, while growth should be around 3% in the coming years. They continued to warn a strong AUD would hamper the recovery somewhat. So, once again it comes back to China and how long their recovery can last, with China FX reserves falling to below $3 trln for first time since February 2011 while China’s FX regulator says China’s FX reserves are ample. Downbeat data from the UK with respect to hosing and retail sales saw GBP under pressure throughout the European session.

FX Majors: EUR European political concerns in the run up to French Presidential Election in April and Brexit continued to extend grips on markets in the absence of first tier economic releases. Eurozone Sentix investor confidence slipped to 17.4 in February, but nonetheless remained near January’s 17-month high pointing to continued growth optimism. GBP GBP slid against the USD, extending last week’s losses. GBP was likely dragged down by rising uncertainty as lawmakers debate PM Theresa May’s legislative plan for ‘Brexit’. Focus shifts to UK manufacturing and industrial production data, along with house prices and trade balance. JPY was the best performer as we started the week. Geopolitical risks underlined by Trump protectionism and the risk of European protection has driven the latest round or risk aversion. The 2Y U.S.-Japan yield spread has narrowed in a JPY positive manner, pushing back toward 140bpts through the mid-point of its range from mid-December

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

Technical: Near term support sited at 1.0670 maintains bullish bias and sets 1.0873 as the next upside objective, only a close back below 1.0580 resets near term bearish bias, opening a move to test symmetry swing support at 1.0515
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Equidistant swing objective at 1.2679 capping advance for now. Near term support sited at 1.2435 removed a close below 1.24 opens 1.2236 symmetry swing support
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 112 sustained breach will open 110.70 symmetry swing support underpinned by 109.90 50% retracement of the move from August 2016 lows. Near term resistance is sited at 114.50 only over 116.20 reasserts upside targets.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Symmetry swing support at 120.40 removed, the failure below 120.40 opens 118.70 as the next downside objective
Retail Sentiment: Bullish
Trading Take-away: Short

Commodities FX: GOLD climbed on Monday, nearing its highest level since November, on worries about the political landscape in the US and in Europe. OIL prices, on the other hand, fell as a stronger dollar and ample US supplies outweighed OPEC output curbs and rising tensions between the US and Iran. AUD RBA as expected to held cash rate at record low of 1.50%. Australia’s retail sales tumbled 0.10% MOM to AUD 25.61 billion in December after a revised 0.10% MOM growth in November. It was the first contraction since July 2016 and despite the surge in sales of food and clothing/ footwear, headline retail sales figure was weighed down by the decline in the household goods and other retailing goods categories. Separately, performance of construction index ticked up to 47.7 in January (December: 47.0), the highest reading in four months. CAD totally reliant on the broader USD tone post-payrolls, flows and technical factors. Oil remains at the top end of its 2017 range as tensions over possible sanctions on Iran from the US have escalated in recent days.

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

Technical: The next upside objective is sited at .7750. Near term support is sited at symmetry swing level .7600 ahead of pivotal .7449
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1.3150 becomes resistance while this level contains upside reactions bears target a sustained breach of 1.30 targeting a move to 1.2820, over 1.32 opens a move back to test 1.3370.

Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The 1225 upside breach opens a move to 1240 as 1218 supports a failure below 1206 opens a retest of 1180
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Rejection from equality objective area at 55.30, a close below symmetry support at 50.68 confirms a medium term high and opens a retest of pivotal 49.00. Near term resistance is sited at 54.50.
Retail Sentiment: Bearish
Trading Take-away: Long

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