New York Forex Report: Sterling Stung On Manufacturing Miss

As anticipated, the IMF approved the inclusion of CNY into the SDR basket effective 1 October 2016, joining USD, EUR, GBP, and JPY as the world reserves currency. Overnight data bag was the not too promising. The rebound in home sales was weaker than expected while regional manufacturing readings from Chicago and Dallas reaffirmed protracted weakness in the US manufacturing sector. There was also nothing in the UK data that suggest the BOE will tighten anytime soon. Japan housing starts unexpectedly fell while Hong Kong retail sales extended its decline for the eighth consecutive month.USD Index was initially weaker over early European trading though seems to have found some footing heading into the US crossover

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

Fundamental: EUR strengthened on positive German and EuroZone employment data. The move was tempered however a stronger USD heading into the US crossover. Key data for the US session is US manufacturing PMI data expected to show a slight improvement.

Technical: While 1.0620 caps intraday upside corrections, bears target a test of 1.05 next ahead of an assault on year to date lows. Only a close above 1.07 eases immediate downside pressure.

Interbank Flows: Bids 1.0550 stops below. Offers 1.07 Stops above.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

eu2015-12-01 07_33_42-NetDania - NetStation

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

Fundamental: GBP retreated sharply from initial session highs as manufacturing PMI data fell below expectations to print 52.7 vs 53.6 exp.

Technical:  With 1.50 breach achieved expect near term profit taking to meet resistance at 1.5160/80. Only a close above 1.52 eases immediate bearish bias

Interbank Flows: Bids 1.4950 stops below. Offers 1.5150 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

gu2015-12-01 07_34_14-NetDania - NetStation

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

Fundamental: Japan October Industrial Production (YoY) was -1.4%, worse than the market expectations -0.9%. Besides, Japan Housing Starts data was -2.5%, seriously worse than market forecasts 2.6%, USD remains fimr against JPY over early European trading.

Technical: While 122.50/30 supports downside reactions, market structure remains bullish to test 2015 highs next. A failure at 122 opens a test of 121.40 support next ahead of pivotal 120.

Interbank Flows: Bids 122 stops below. Offers 124 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

uj2015-12-01 07_35_00-NetDania - NetStation

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

Fundamental: Japan’s 3Q capital spending was surprisingly strong at 11.2% y/y (from 5.6% in 2Q and well above the forecast of just 2.2%). Excluding software spending, capital spending was still a strong 11.2% (from 6.6% in 2Q, and again well above the forecast of 1.7%). Despite the better data, JPY weakness persists heading into the December FOMC meeting.

Technical:  While 131.30 caps upside reactions expect a sustained break below 130 to confirm a retest of 2015 lows. Only a close above 132.50 eases immediate bearish pressure. Intraday initial upside hurdle is 130.50 while this caps upside corrections expect further grind lower to retest and break 129.70 lows.

Interbank Flows: Bids 130.50 stops below. Offers 132.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

ey2015-12-01 07_37_34-NetDania - NetStation

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

Fundamental: Australia’s current account recorded a smaller deficit last quarter than in the June quarter when it was its highest in more than seven years, however, the trade gap did not shrink as much as expected. As expected no policy change from today’s RBA meeting, the central bank retained a largely positive tone in ther economic outlook but noted that there remains scope for further easing.

Technical: While .7170/50 remains the bid zone expect grind higher to test .7350 area next, only a close below .7150 concerns near term bullish bias.

Interbank Flows: Bids .7150 stops below. Offers .7300 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

au2015-12-01 08_07_57-NetDania - NetStation

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

Fundamental: USDCAD is slightly weaker heading into the US cross-over with USD a little weaker on the day so far. Oil remains unchanged; traders look ahead to Canadian  3Q GDP at 1330 GMT expected to weaken slightly MoM and improve YoY.

Technical: Bulls have the ball while 1.3280/60 supports intraday downside. A close below 1.3220 would ease the near term bullish bias and suggest a broader correction is underway.

Interbank Flows: Bids 1.3250 stops below. Offers 1.34 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

uc2015-12-01 08_08_41-NetDania - NetStation

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