New York Forex Report: US Data To Decide Dollar Direction Into Weekend

New York Forex Report: US Data To Decide Dollar Direction Into Weekend

New York Forex Report: FX trading and turnover is quiet into the end of the week; ranges are very narrow in the European session for most G10 pairs, leaving the USD firm, but little changed, after yesterday’s bounce. Global equities have slipped and major commodities are softer but developed market bonds are mixed on the session, with US Treasury bonds under-performing core European debt where pressure at the periphery (Greek debt sharply lower) has driven flows into bunds. Short-term spreads are ending the week 3-4 bps wider from Monday in the USD’s favour versus the EUR, supporting the USD. For the session ahead, markets will focus on US GDP data for Q4 and durable goods. The consensus call for 2.2% growth last quarter, down from 3.5% in Q3. Markets are unlikely to pay too much attention to a downside miss, considering focus on reflation expectations during the Trump presidency but an upside surprise (above 2.4/2.5%) should provide the USD with some support; stronger growth and expectations of a broader lift in the economy may force markets to price Fed probabilities slightly more aggressively through the latter part of the year.

FX Majors: EUR ECB’s Villeroy said that fears over the resurgence of inflation exaggerated. On ECB’s asset purchase programme, he said it wouldn’t last forever but exit strategy is not discussed yet. Meanwhile, another ECB official Weidmann, known to be one of ECB’s top hawks, said that economic outlook in the euro-area is positive and that inflation is gradually approaching price stability target set by the central bank. GBP The UK economy expanded 0.60% QOQ in the last three quarters, posting further evidence that downside risks from Brexit remained well contained. Underlying details showed that the manufacturing sector avoided another quarter of contraction in 4Q and instead rose at a solid pace of 0.70% QOQ, masking slower growth in service oriented industries. JPY helped along by the latest news the BOJ has boosted 5-10 year JGB purchases, but overall, the price action is more likely a function of the revival of US Dollar demand into the latter half of the week.

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

Technical: Test of pivotal larger 1.0788 symmetry resistance is the next upside objective. Anticipated sellers/profit taking to emerge at the initial test of this level. Near term support sited at 1.0670, on a close back below 1.0580 resets near term bearish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Equidistant swing objective at 1.2679 encourages profit taking ahead of 1.2772. Near term support sited at 1.2435 as this survives bullish momentum persists
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Broader corrective phase to test 112 is now underway, a breach here will open 110.70 symmetry swing support underpinned by 109.90 50% retracement of the move from August 2016 lows. Near term resistance is sited at 116.10 only over 116.20 reasserts upside.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Symmetry swing support at 120.40 defended sets sights on, 124.42 symmetry swing resistance. Near term resistance is sited at 122.76. A failure below 120.40 opens 118.70
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD dropped for a third straight day, this time weighed by an overnight rally in USD, with the yellow metal shedding 1% to 1,188.50, lowest levels in two weeks. OIL resumed its rally, set for a second straight week of gains, having gained $1.03 per barrel, or 1.95% to $53.78 on Thursday. AUD No major data out of Australia on Friday but looking at the sum of its parts, the data was supportive, with producer prices coming in hotter while exports shot up. Imports were softer, but again, on the whole, mostly supportive. CAD D is benefiting from the executive order signed by US President Trump that clears the path for the Keystone XL pipeline to go ahead. CAD There are no domestic releases ahead of the monthly GDP data for November on Jan 31, leaving the near-term focus squarely centred on the market tone.

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

Technical: The close above .7525 resets bullish attention on range highs towards .7800. The next upside objective is equidistant swing sited at .7631 Near term support is sited at symmetry swing level .7490 ahead of pivotal .7440
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Close below 1.3140 reestablishes a more bearish tone in erratic trade, 1.3150 now becomes resistance while this level contains upside reactions bears target a test of 1.30
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1220 symmetry swing trend resistance test underway anticipated profit taking/sellers emerged on the initial test of this level. Near tern support is sited at 1190, failure here opens 1153
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Rejection from equality objective area at 55.30, 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 54.50.
Retail Sentiment: Bearish
Trading Take-away: Long

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