New York Forex Report: Sterling Soars 2%

New York Forex Report: Sterling Soars 2%

New York Forex Report: UK PM Theresa May has delivered her 12 point plan for the UK’s EU exit sterling has gained the most since 2008 versus the generally weaker USD. The USD is sharply lower this morning versus G10 FX space and many emerging market currencies in response to remarks by President-elect Trump in a WSJ interview; Trump said the USD was “too strong” in part because China holds down the yuan. The context of the remark is not is not easy to determine, does he think USDCNY specifically is too high or does he feel the USD broadly too strong? Traders have not bothered to await for clarification and the USD has tumbled broadly, pushing EURUSD through recent highs and USDCAD back to recent lows. Given the preponderance of long USD positions in the market currently, there is a real risk that the president elect’s comments drive traders out of their longs and onto the sidelines until there is clarity on the issue. Volatility inducing comments from the incoming president may be something we have to get used to but his first verbal foray into the FX space could severely undermine the USD’s perceived strength going forward.

FX Majors: EUR Euro zone’s trade surplus rose €1.9 billion to €22.7 billion in November thanks to quicker increase in exports. Exports grew 3.20% MOM in November, overshadowing the 1.80% MOM increase in imports. GBP UK’s Prime Minster Theresa May set the stage for a completely new trading relationship with the European Union, affirming that she has no interest in a “partial” or “associate” membership of the EU or “anything that leaves us half in, half-out”. On the data front, house prices grew at a softer pace of 3.20% YOY in January, softening from the 3.40% YOY increase in December. According to report by Rightmove, uncertainty caused by Brexit coupled with the increase in stamp duty had put the brakes on property prices acceleration and was more prominently so in London than other areas. JPY Japan’s tertiary industry index edged up 0.20% MOM in November. The rise in wholesale trade and business related services contributed the most to the increase in the headline figure. Equally upbeat, machine tool orders increased 4.40% YOY in December and snapped sixteen straight contractions amid higher local and overseas demand.

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

Technical: Eroding symmetry swing resistance sited at 1.0640 suggesting a test of pivotal 1.0708 larger symmetry resistance. Anticipate sellers to emerge at these levels, as this band of resistance caps upside bears target retest of 1.0338 lows. Near term support sited at 1.0550 failure here suggests early reversal to trend
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: New monthly lows printed with gap lower at the Asian open Sunday sub 1.20 before profit taking prompts sharp reversal, this reversal has gathered significant momentum and is now threatening a reversal in sentiment. 1.2380 represents the 50% retracement from December highs to January lows
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Price erodes pivotal 114.70 trend support the close below this level concerns near term bullish thesis and suggests broader corrective phase to test 112 is now underway, near term resistance is sited at 115.10 only over 116.20 reasserts upside
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Close below 121.60 concerns bullish bias, expect test of symmetry swing support at 120.40 bulls will look to defend this level to set sights on, 124.42 symmetry swing resistance. A failure below 120.40 opens 118.70
Retail Sentiment: Bullish
Trading Take-away: Short

Commodities FX: GOLD edged higher for a sixth straight day, with the yellow metal closing above $1,200 per ounce for the first time since 22-Nov as concerns over hard Brexit spurred safe haven demand. OIL rose 27 cents to $52.64 a barrel on holiday shortened Monday after Saudi Minister of Energy and Industry Khalid Al-Falih said that OPEC probably won’t need to extend its output cuts past June as the current six month term should suffice to balance the market. AUD RBA’s Harper said that Australia will avoid recession but economy not out of the woods. He would like to see the AUD lower but does not expect a sudden decline in the currency on the horizon. He added that Australia could benefit from trade tensions between US and China. CAD has a key risk on Wednesday with the BOC’s rate decision and MPR. While the market is expected no change in rates, the projections for the upcoming year will be key

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

Technical: Price erodes symmetry swing resistance sited at .7494 a close above .7525 resets bullish attention on range highs towards .7800 Near term support is sited at symmetry swing level .7340
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Breach of corrective channel below 1.3160 increases bearish pressure, failure to recapture channel opens a tests of psychological 1.30
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Close above 1190 opens 1220 symmetry swing trend resistance. Near tern support is sited at 1190, failure here opens 1153
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Sharp 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 53.50
Retail Sentiment: Bearish
Trading Take-away: Long

Posted in Forex Analysis, New York Forex Report, tagged with on