New York Forex Report: UK & German Data Dings Keep Dollar Buoyant

New York Forex Report: UK & German Data Dings Keep Dollar Buoyant

New York Forex Report: The seeming de-escalation of tensions between the US and North Korea has seen “risk-off” safety trades taken back, propelling US equities back to near all-time highs and US yields back to recent mid-ranges, providing support to the USD. While price patterns suggest that a more “risk-on” bias can be adopted and while markets hope geo-political risks do completely dissipate, it is difficult to say “that was it”. Participants suspect price action to remain choppy and vigilance is still required. However, data should take over as the driver in the coming days. This return to data focus has witnessed a sharp decline in GBP during European trade after UK CPI underwhelmed missing forecasts delivering another blow to hawks advocating a BoE hike. Similarly data from Germany came in sub expected levels showing 2Q growth slowing to o.8% which has weighed on the EUR

USD New York Fed President Dudley (voter) said his outlook is little changed since the start of the year. He still supports another interest rate hike in 2017 if the economy evolves as expected. He added that market expectations are not unreasonable regarding a September balance sheet move

EUR Industrial production in the Eurozone contracted 0.6% MoM in June, slumping after growing 1.2% in May. Output was weighed down by declines in capital goods and durable consumer goods, both of which are potential signs that confidence is on the wane. Annually, the growth in production eased to 2.6% from 3.9%, against expectations of a softer slowdown to 2.6%.

GBP Today, U.K’s inflation figures will come into focus. After a brief dip to 2.6% in June, consumer prices are expected to bounce back modestly to 2.7% in July but probably not enough to warrant a rate hike by Bank of England by the end of the year.

JPY Japan’s economy grew 1.0% QoQ in 2Q, according to a preliminary report, accelerating from 0.4% in 1Q and besting estimates of a 0.6% increase. Note that the eye-catching -0.3% performance in 1Q that had most wondering if a recession is coming had been upwardly revised to 0.4%. This is the quickest growth in nine quarters, and was spurred by private consumption (2Q: +0.9% QoQ vs 1Q: +0.4%) and business spending (2Q: +2.4% vs 1Q: +0.9%). Annually, GDP jumped 4.0% from 1.5% in 1Q.

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

Technical: 1-3 Day View – Pivotal 1.17 survives for now, as this level contains downside reactions bulls look for a retest of cycle highs en route to 1.20, intraday upside hurdle sited at 1.1850, only a daily close below 1.1620 concerns the near term bullish bias setting a top for a test of 1.1440.

1-3 Week View – 1.1876 achieved focus shifts to 1.20 . Weekly close below 1.14 neutralises bullish objectives.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – 1.31 daily closing breach concerns the near term bullish bias opening a retest of 1.28, near term resistance is sited at 1.3080, only a close over 1.3160 reestablishes near term bullish tone

1-3 Week View – The weekly close above 1.3045 targets the broader symmetry swing objective sited at 1.3263 only a close back below 1.28 would jeopardise the bullish advance.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – 108.93 downside objective achieved anticipated profit taking pull back on the initial test of this level playing out, near term resistance sited at 110.50 as this contains expect a retest of the cycle low at 108.73, a daily close over 111.10 neutralises downside retest.

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: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Support at 128.00 survives as this holds there is potential for a retest and breach of cycle high at 131.39, however failure to recapture 1.30 sets up a retest of 128 and failure here sets a top for retest of 125.80.

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, 129.44 upside objective achieves as 128 supports bulls look for a move to test 133.36 as the broader upside objective..
Retail Sentiment: Bearish
Trading Take-away: Long