New York Forex Report: Trump Xi Call Stabilises Risk Sentiment

New York Forex Report: Trump Xi Call Stabilises Risk Sentiment

New York Forex Report: The USD is mixed in narrow ranges on the day so far. Risk appetite has picked up somewhat, after China’s President Xi urged dialogue to settle tensions on the Korean peninsula in a phone call with President Trump, lifting European shares after Japanese markets dipped 1%. Developed market bonds are modestly lower as a result while the JPY has eased off its overnight peaks. German wholesale prices were unchanged in the Mar month, posting a 4.7% gain in the year, down slightly from the 2.0% pace seen in February. EUR is soft from the levels seen late yesterday. GBP rose initially in response to this morning’s UK data. The unemployment rate held steady at 4.7% in the three months through February while average earnings gained 2.3% in the February month (unchanged from an upwardly revised January gain of 2.3% and a tenth better than expected). JPY is quiet consolidating Tuesday’s impressive 1.2% gain, testing fresh 2017 highs at levels last seen in mid November. The broader tone is dominant and JPY’s risk profile leaves it vulnerable to knee-jerk haven-driven gains in periods of risk aversion.

USD data due from the US was second tier. NFIB small business optimism index slipped to a four-month low of 104.7 in March (February: 105.3) likely dragged by the defeat of Trump’s administration to overhaul health care.

EUR Euro zone’s industrial production contracted 0.30% MOM in February followed a revised 0.30% MOM expansion in January, due to the decline in energy output. On a separate report, economic confidence index rose to 26.3 in April, the highest level since December 2015. The indicator was boosted by robust outlook in Germany’s economy.

GBP Sterling’s depreciation since last year continued to fuel price growth in March, putting strain on consumer spending as real wage growth decelerated. CPI rose at an unchanged pace of 2.30% YoY in March and exceeded BoE’s 2.00% target since last month. Retail price index (March: +3.10% YoY vs February: 3.20% YoY) and producers price index (March: +3.60% YoY vs February: 3.70% YoY) rose at a slightly slower pace last month but affirmed that import costs was high although domestic price pressure stayed modest, leaving rooms for BoE to refrain from tightening monetary policy just yet.

JPY In Japan, machine tool orders rose 22.60% YoY in March after a 9.10% YoY increase in February. Foreign orders climbed a whopping 39.10% YoY in March, offsetting the pullback in domestic orders (+1.80% YoY) last month amid firmer global demand.

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

Technical: 1-3 Day View – 1.0570 symmetry swing support the immediate downside objective achieved, near term resistance is sited at 1.0639 as this contains corrections 1.05 should be tested next, over 1.07 opens 1.0860.

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: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – as 1.2460 now acts as support price looks set to test a breach 1.2505 setting up a quick move to symmetry swing resistance sited at 1.2544 and a return to the established 1.26/1.24 range

1-3 Week View – While below 1.2864 bears set sites on 1.10 as the broader downside objective, a weekly closing breach of 1.2660 will set up a move to test the weekly bearish line in the sand

Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View 111.75 range support breached the daily close below here suggests downside range break and opens 108.43 equidistant swing objective to the downside, near term resistance is sited at 110.20, only over 112 stems selling pressure.

1-3 Week View – as 110 weekly symmetry swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 which represents an equidistant swing from the cycle, negates the broader bullish theme.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – pivotal trend line support at 116.57 has been breached and barring a snap back move today with a close over 117.60, 114.65 becomes the next downside objective Only over 120.50 arrests near term selling pressure.

1-3 Week View – As symmetry swing support sited at 117.69 survives on a weekly closing basis bulls will continue to target weekly symmetry swing resistance sited at 124.42, a weekly close above here would set a broader base for further upside.
Retail Sentiment: Bullish
Trading Take-away: Short

Posted in Forex Analysis, New York Forex Report, tagged with on