New York Forex Report: Traders Dump Dollar Post Trump

New York Forex Report: Traders Dump Dollar Post Trump

New York Forex Report: The USD decline that followed the Trump press conference Wednesday has extended more significantly, driving the JPY and the CAD around 1% higher on the session and leaving the USD itself broadly lower on the day. US Treasury bonds are firmer (10Y bond yields are nearly 30bps off the recent peak) and yield spread compression, while relatively minor, is helping undercut the USD. The Trump dump reflects market disappointment that more information on the new administration’s economic and fiscal plans were not divulged yesterday which has cast some doubt over the broader reflation trade (higher yields, stronger equities, rising USD). The Dollar is heading for its third consecutive weekly loss, something we haven’t seen since March. It is early days for the Trump administration, however, and still early in the year. The broader thesis of USD remaining relatively strong on the basis of relatively superior growth and relatively tighter monetary policy over the course of the year remains intact for now. The US data release calendar picks up today (claims, import prices ahead of retail sales tomorrow where consensus calls are for a very decent gain in sales) and there is a huge helping of Fedspeak over the course of the session (Harker, Evans, Lockhart, Bullard, Kaplan and Chair Yellen).

FX Majors: EUR recovery post Trump press conference after the President-elect let down US Dollar bulls after failing to make and mention of taxes, deregulation or fiscal stimulus. Today the focus will shift to the ECB Minutes and Eurozone industrial production. As far as the ECB Minutes go, expect Draghi and company to continue to err on the dovish side. GBP UK’s industrial production climbed 2.00% YOY in November, alleviating drag from the 0.90% YOY drop in October thanks to the rebound in energy output as a major North Sea field resumed operations. On the other hand, trade deficits widened to £12.2 billion in November (October: – £9.9 billion) due to a higher surge in imports (+8.40%) compared to exports (+2.80%). Construction output rose 1.50% YOY in November (October: +0.70% YOY), affirming that demand for housing remained resilient amid shortages of housing supply. JPY Japan’s leading index surged to a fifteen month high of 102.7 in November (October: 100.8), reflecting an improvement in the outlook of the economy as momentum picked up in the second half of 2016. A gauge of current economic conditions also nudged higher to 115.1 in November (October: 113.5), marking its highest reading since March 2014. Separately, current account surplus narrowed to ¥1415.5 billion in November (October: ¥1719.9 billion) mostly due to the ¥266.4 billion decline in investment income.

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 1.05 failure here suggests early reversal to trend.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: New monthly lows printed yesterday before profit taking prompts sharp reversal, near term resistance sited at 1.23. A close over 1.23 suggests false downside break an opens move back to test 1.2430.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Price erodes pivotal 114.70 trend support a close below this level concerns near term bullish thesis and suggests broader corrective phase to test 112, near term resistance is sited at 116
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Buyers on the front foot while 121.60 supports on a closing basis, 124.42 symmetry swing resistance remains the upside objective, anticipate sellers to emerge and price to stall on the initial test of this level for a retests of 123.80 from above.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD price continued to benefit from a broadly weaker US dollar for a 3rd straight session and price closed at its highest level in 7 weeks. This gold price increased by US$11.10 to close at US$1,196.60 on Wednesday. OIL prices finally rebounded after marked declines for two straight sessions as data on Wednesday (11 Jan) showed that refiners processed a record amount of crude and supplies were down by 579,000, drained from the main storage hub in Cushing, Oklahoma. The US Nymex WTI finished the session higher by US$1.43 to close at US$52.25. AUD was a big winner in Wednesday trade, outperforming across the board on impressive performance in the base metals. CAD latest recovery in the price of OIL certainly has been a big help to the Canadian Dollar, with the Loonie rallying back towards its December high against the Buck

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 .7380
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: 1.3620 becomes the next upside objective. The close below 1.3250 concerns the bullish bias, a second failure here opens symmetry swing support sited at 1.3090. Near term resistance is sited at 1.3290.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: Close above 1190 opens 1220 symmetry swing trend resistance. Near tern support is sited at 1150, failure here suggests trend resumption and opens 1113 symmetry swing objective..
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 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 symmetry swing 52.85
Retail Sentiment: Bearish
Trading Take-away: Long

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