New York Forex Report: Sterling Soars Squeezing Shorts

New York Forex Report: Sterling Soars Squeezing Shorts

New York Forex Report: The USD and US yields are stabilising after the post-FOMC slide. The Fed delivered what we thought was the biggest risk for the USD yesterday a “dovish hike”. By sticking to the previous script, there were no concessions to the USD bullish view that going earlier might open the door to tightening a little more aggressively this year and beyond. The Bank of England Monetary Policy Committee voted 8-1 to keep the Bank Rate at 0.25%, with Kristen Forbes the sole member voting for a 25bps rise. This was the first split in the vote since July 2016 and the first time a member has voted for a hike since Jan 2016. The Minutes said Forbes believed that the monetary policy trade-off had evolved to justify an immediate increase in the Bank Rate, while the other 8 members felt the current policy was appropriate. For some members, however, rising inflation and a softer deceleration of domestic activity meant tightening of policy would be appropriate should further news on the upside materialise. The MPC provided no policy bias.

FX Majors: EUR In the Eurozone, Italian retail sales rose 1.4% MoM in January but were little changed from a year earlier. Meanwhile, French HICP inflation was confirmed at 1.4% YoY in February whilst Italian HICP inflation was confirmed at 1.6% YoY. GBP UK’s firms added 92k to payrolls in the three months through January to a record 31.9 million, pushing down unemployment rate by 0.10ppt to 4.70%. Unemployment rate was at its four decade low but average earnings rose 2.30% in January, its weakest pace in five months as inflation built up. JPY Japan’s industrial production declined 0.40% MoM in December after a revised 0.70% MoM increase in November. The drop was less than a previous estimate of 0.80% MoM slip. Staging the first decline in six months, the decline in industrial output was another indication that sluggish factory production may continue to drag GDP growth this quarter

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

Technical: The closing breach of 1.0650 arrests near term bearish bias and resets attention on upside objectives, with 1.0830 the primary upside objective ahead of 1.0985 equidistant swing objective. A close back below 1.06 suggest continuation of trade environment and a false upside break
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Only over 1.2330 stems selling pressure near term resistance sited at 1.2250 removed this level should now act as support. Failure below 1.22 suggests a false upside break to target pivotal 1.1985
Retail Sentiment: Neutral
Trading Take-away: Neutral

USDJPY
Outlook: Short Term (1-3 Days): Neutral – 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): Neutral – 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.

Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD prices rose on Wednesday after the Fed announcement. Markets were also focusing on Wednesday’s Dutch elections, which have been boosting gold’s safe-haven appeal. OIL prices rose more than 2% Wednesday, lifted by a surprise drawd own in US crude inventories and data from the International Energy Agency (IEA) showed US crude stocks fell last week, dropping after nine consecutive increases. Inventories fell by 237k barrels in the week to 10 March compared with expectations for an increase of 3.7 million barrels. AUD Australian unemployment rate edged up by 0.20ppt to 5.90% in February but labor force participation rate was unchanged at 64.60%. The number of jobs dropped 6.4k to 11.998 million, pushing unemployment rate higher and reversed the 13.7k job gains in January. CAD As there is little in terms of Canadian domestic data this week, CAD is using the FOMC decision for direction.

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

Technical: The breach of .7650 resets attention on upside targets primarily offers above .7740 near term support is sited at .7630
Retail Sentiment: Bearish
Trading Take-away: Long

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