New York Forex Report: Trumpflation Trade

New York Forex Report: Trumpflation Trade

New York Forex Report: The USD is strengthening broadly against all of the G10 currencies, sending the USD Index to fresh 2016 highs. Interest rate differentials are the dominant theme as market participants consider the outlook for relative central bank policy and the prospect of an increasingly confident Fed in response to the shift in the U.S. fiscal outlook following last week’s election. JPY is under performing along with CHF and EUR. GBP is notably resilient while AUD, CAD and gold are showing modest declines from Friday. Looking ahead expect traders to focus on the swath of Fed speakers this week (Kaplan, Lacker and Williams today) with Yellen appearing before the Joint Economic Committee on Thursday. Crucially, traders will be on the lookout for any reactionary (or not) comments in view of the new political climate. Note that the Fed’s Fischer stated on Friday that the Fed is monitoring the rise in long term US yields and will adjust policy accordingly. He further added that the case for gradual rate hikes appears strong enough.

FX Majors: EUR taking into account the improved US inflation outlook given the outcome of the US Presidential election, speculation for a Fed rate hike in December increased. EUR/USD reached its lowest level since 25 October at 1.0827 in the aftermath of the US data release Friday. GBP appeared to be the only outperformer against the USD among the major currencies throughout last week, buoyed by expectations that Donald Trump’s unexpected election triumph will produce a US administration that sympathises with UK’s Brexit decision. JPY Japan’s economy grew 2.20% QOQ annualized pace in 3Q, rebounding from the soft 0.70% reading in the previous quarter due to quicker exports and government consumption growth. On the other hand, tertiary industry index dropped 0.10% MOM in September, falling for the first time in the past four months.

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

Technical: Bears have the ball and target near term support is sited at pivotal 1.0750, a breach of 1.07 will shift bearish attention towards 1.05. Near term resistance is sited at 1.0850, medium term 1.1030 is a key upside hurdle which will need to be captured on a closing basis to stabilise the pair
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Price has been rejected on the initial test of equidistant swing resistance sited at 1.2685. Below 1.25 challenges the corrective advance and opens a move to retest last weeks lows at 1.2350, over 1.26 opens a retest of last weeks highs.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The breach of 107.40 opens a test of pivotal equidistant swing resistance sited at 108.03, prior 105.50 now support. only below 104.20 concerns bulls
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Upside attention on 116.20 as the primary upside objective with in in the broader 112-116 range. A top side expansion through 116 opens 121 equidistant swing objective. A close below 114 opens 112 again.
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD price ended lower on the back of the stronger US dollar & higher US interest rate expectations. This was the 5th straight session of decline and the gold price decreased by a massive US$42.10 to US$1,224.30 on Friday. OIL prices fell further on Friday (11 Nov) to an 8-week low due to on-going concerns about persistent over-supply and increasing scepticism that OPEC can coordinate an effective production cut. Meanwhile, oilfield service company Baker Hughes reported a 2-count rise in the number of active oil rigs, following last week’s 9 new oil rigs being placed into production. The US Nymex WTI futures decreased by US$1.25 to US$43.41. AUD broke down from the upper end of its three month uptrend channel after the US Presidential election amid increased speculation of a Fed rate hike in December. AUDUSD took a dive to reach a low as 0.7519 Friday CAD Amid falling oil prices, USD/CAD climbed to its highest level since March at 1.3546. The key focus for the week is Friday’s CPI, which is expected to rise above the prior reading of 1.3% to 1.5% YoY

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

Technical: Continues to rotates in the contracting range with .7730 capping upside and .7500 containing downside reactions, a breach of the lower end of the range opens .7412 symmetry support. Through .7750 opens .7830 on the upside.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1.35 target achieved, as 1.3250 supports bulls target a test of 1.3573 only below 1.2960 threatens this objective and suggests a test of pivotal 1.2820.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Bears target equidistant swing objective sited at 1203, near term resistance is sited at 1241. Only a close over 1280 stabilises the decline.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 42.73 as the next downside objective ahead of 39.78. Near term resistance is sited at 44.15 ahead of 45.93 only a close over 47.33 stabilises the decent a eases bearish pressure.
Retail Sentiment: Bullish
Trading Take-away: Short