New York Forex Report: Sterling Stabilises

New York Forex Report: Sterling Stabilises

New York Forex Report: After UK PM May’s Sky interview last weekend caused volatility at the start of the week, a Sunday Times article has done more so this week, reminding us of the old Bangles song “Manic Monday”. The article again highlighted that the PM is looking for a clean “hard Brexit” and will then look to develop strong trade partnerships. Chancellor Hammond made further comments suggesting the UK Government will do whatever it takes to keep Britain competitive, with the Netherlands suggesting they will block any trade deals unless the UK signs binding tax agreements. GBPUSD gapped lower on the open, but is so far holding over support in the 1.1980 region currently trading 1.2058. Overall though expect a quietery afternoon in the markets with the US markets largely closed for the Martin Luther King Day holiday and no data of real note this morning from the Euro area or the UK. BOE Governor Carney is scheduled to speak this evening. The title of his talk is ‘Policy Issues affecting the Bank of England’. This will inevitably mean that he is likely to be asked about the impact of ‘Brexit’ negotiations on the BoE but he may be reluctant to comment ahead of PM May’s speech tomorrow. Following BOE Chief Economist Haldane’s comments on the dwindling credibility of economists, he may also be questioned on whether recent forecasting errors have damaged the BOE’s reputation.

FX Majors: EUR Euro area’s upbeat industrial production figures and Germany’s optimistic GDP data supported gains in the EUR, this week, the Euro area’s inflation data, along with the ECB policy meeting, will likely be key. GBP Gaps through 1.20, The Sunday Times in UK reported that UK PM May will announce that Britain is seeking a ‘clean and hard’ Brexit in a speech on Tuesday. Though she will promise to create a strong new partnership with the European Union, she will also make it clear that the UK is set to pull out of the single market and the European customs union in order to regain control of immigration and end the jurisdiction of the European Court of Justice. JPY Japan kicked the week with November key machinery orders and PPI data earlier today which came in inline with expectations. From here, the calendar is pretty quiet with final November production data on Wednesday the focus.

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

Technical: Testing symmetry swing resistance sited at 1.0640 ahead of pivotal 1.0720. 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): Bearish – Medium Term (1-3 Weeks): Bearish

Technical: New monthly lows printed overnight with opening gap lower at the Asian open sub 1.20 before profit taking prompts sharp reversal, near term resistance sited at 1.2110 as bears target 1.1878 as the next downside objective.
Retail Sentiment: Bullish
Trading Take-away: Short

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 was well bid on Friday, with the bullion briefly retracing to about $1,188 an ounce after a strong set of U.S data but subsequently snap back to close up 0.16% at $1,197.34, up for a third consecutive week. OIL settled down $0.64 (-1.2%) to $52.37, over concerns on the compliance of the output cuts by OPEC and other producers agreed two months ago. For the week, WTI has dropped 3%, first weekly loss in five. AUD gained ground against the USD, crowning a weekly gain, amid an advance in Australia’s two year government bond yield, a rise in Australia’s building permits, along with an advance in iron ore prices, likely supported the AUD last week. CAD is consolidating with no domestic data until Wednesday’s BOC decision, statement, and MPR release. CAD has continued to ignore its usual drivers, oil and central bank policy, instead moving with the broader market tone.

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

Technical: Price testing 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 today 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

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