New York Forex Report: Trump To Slash Corproate Tax

New York Forex Report: Trump To Slash Corproate Tax

New York Forex Report: The USD is strengthening broadly with notable weakness in AUD and NZD following the release of disappointing Australian CPI figures for Q1. EUR and JPY are soft heading into their upcoming policy decisions and GBP is steady. CAD remains vulnerable, with risk of a push through Tuesday’s one year low as trade concerns compound the impact of weaker oil prices and the renewed widening in interest rate differentials. The key focus for FX remains the Fed, as market participants consider the renewed firming in tightening expectations with fed funds futures implying a near-70% chance of a 25bpt hike in June.

USD US data improved in the housing sector while consumer confidence and manufacturing dipped. The S&P gauge of increase in house prices across 20 US cities gained 5.85% YoY in Feb, quickened from 5.66% previously and bested estimates of a 5.78% gain. The quickest gain since Jul 2014 continue to underline a firmer housing market, along with a 5.8% MoM increase in new home sales in March. Conference Board consumer confidence pulled back more than expected from a 16-year high in March but nevertheless remained elevated at 120.3 in April. Manufacturing sector growth in Richmond Fed district moderated slightly in April, pushing the index lower to 20 from 22 although estimates predicted a quicker slide to 16. This follows a softer reading in Dallas Fed manufacturing activity yesterday

EUR Focus now turns to this week’s ECB meeting; with little expectations for an actual policy change at this meeting, the focus will instead be on any signals from President Draghi regarding timing of policy normalisation. Over in Italy, in order to narrow the budget deficit, the Italian government announced that it will raise taxes on tobacco and gambling and also crack down on Value Added Tax evasion (VAT). France reported better than March manufacturing confidence data for April (108 vs 104 in March).

GBP UK government finances weakened in Mar as public sector net borrowing rose £5.1b, up from £1.8b in the month before, while public sector net cash requirement jumped to £34.3b from £12.9b previously. The central government’s net cash requirement also rose £18.3b after registering a decline of £3.6b in February.

JPY continued its decline, down 5.71%, as risk assets furthered their move up on the back of the market position French election results. The BoJ is expected to meet on Thursday. Market consensus is for the BoJ to maintain its dovish tone and ultra-low rates. Expect the JPY to be further driven by broader market sentiment as there is little in terms of domestic releases until Thursday.

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

Technical: 1-3 Day View – As 1.09 supports expect a grind higher to test 1.0982 as the next upside objective. Only below 1.0820 concerns near term bullish bias.

1-3 Week View – While 1.10 contains corrective attempts higher focus remains on a retest of 1.03 ahead of 1.0118 extension objective form 2015/17 consolidation. Only over 1.14 sets upside focus on 1.1876
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Testing 1.2880 equidistant swing resistance as 1.2770/50 supports bulls will focus on a test of psychological 1.30 magnet , only below 1.2560 concerns near term bullish bias.

1-3 Week View – While below 1.2880 bears set sites on 1.10 as the broader downside objective, a weekly closing breach of 1.2880 opens 1.30 as the next upside objective ahead of symmetry swing objective sited at 1.3238
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – As 1.1050 supports potential to test 111.75 pivot, a close over 112 resets focus on larger upside objectives

1-3 Week View – as 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Near term support sited at 120.35 as price prepares to test pivotal trend line resistance at 122.35 a close over this level opens 124.40.

1-3 Week View – The weekly close below symmetry swing support sited at 117.69 sets a bearish tone with 113.70 the medium term downside objective , a weekly close above 118.50 would arrest the immediate downside risk, resetting focus on pivotal 124.40.
Retail Sentiment: Bearish
Trading Take-away: Long

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