New York Forex Report: US GDP Coming Up

The European morning has seen the US Dollar retracing some of the gains made following yesterday FOMC statement which was received by markets as signalling a strong likelihood for lift-off in December.  The moves this morning are likely driven by profit taking ahead of the US 3Q GDP print at 1230 GMT expected at 1.6% with PCE data to follow expected 1.4%.  Given the Fed’s assessment that economic activity has been expanding moderately and should continue to do so leading up to the next decision, key data releases will be main drivers of risk. Both commodity and equity markets are slightly softer  heading into the American crossover with oil pausing around the $45 p/b mark.

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

Fundamental: EURUSD strengthened over the European morning  with USD weaker across the board. German unemployment data added support with the headline rate remaining unchanged at 6.4% and the change beating expectations of -4k at -5k. EuroZone economic confidence saw a surprise beat also printing 105.9 against expectations of 105.1. Traders will now look ahead to German CPI data at 1300 GMT expected to increase to 0.2% from 0% previous.

Technical: Trades to  our near term objective of 1.09 and tests stops just below where profit taking emerged. Today while 1.10 caps intraday upside reactions anticipate a retest of the post FOMC lows, with a daily symmetry objective at 1.086 as the next downside objective.

Interbank Flows: Bids 1.0850 stops below. Offers 1.10 Stops above.
Retail Sentiment: Neutral
Trading Take-away: 1.09 target achieved, sidelines for now

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

Fundamental: GBP saw light and choppy trading over the European morning. Consumer credit and net lending data showed positive momentum with credit in line at 1.3bln and net lending increasing again to 3.6bln from 3.4bln previous but mortgage approvals dropped to 68.9k from 70.7k previous, sharply missing expectations of 72.5k.  The disappointing mortgage approvals data was then compounded by CBI reported sales data printing 19 against 35 expected, another stark miss, leading GBP lower on the session.

Technical:  While 1.5300 caps intraday upside reactions expect bearish pressure to persist targeting stops sub 1.52 as the next downside objective. A close above 1.53 resets bullish expectations of a test of 1.56.

Interbank Flows: Bids 1.52 stops below. Offers 1.5350 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Venture long back through 1.5330 targeting 1.56

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

Fundamental: JPY weakens as we head into the BOJ’s October meeting with expectations still tilted towards the announcement of further easing. Support overnight from better than expected industrial production showing a contraction of just -0.9% against expected -2.6% were upstaged by the strong US Dollar.

Technical: Bulls target a sustained break of 121 to target range highs at 121.85 an intraday failure at 120.00 would suggest return to range.

Interbank Flows: Bids 119.50/30 stops below. Offers 121.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Buy pullbacks against 120.50 targeting upside range break

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

Fundamental: EURJPY traded higher over the European morning with EUR strength and JPY weakness both present in markets. Traders will look ahead to Japanese CPI tonight expected 0% against 0.2% previous and most importantly the October BOJ meeting.

Technical:  Bears now target equality corrective objective at 131.20 while 132.90 caps upside reactions, only a close above 133.50 eases immediate bearish pressure.

Interbank Flows: Bids 131.00 stops below. Offers 133.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sell pullback against 134,50 targeting 131.20

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

Fundamental: In the absence of domestic data, markets will look to Q3 GDP data and unemployment claims today from the US for further trading signals .

Technical: The breach of .7140 concerns near term bullish bias and suggests a retest of pivotal .7030/50 next, failure here firmly re-establishes the bearish tone and opens a retest of 2015 lows and potential broader bearish trend continuation move.

Interbank Flows: Bids .7100 stops below. Offers .7250 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now

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

Fundamental: USDCAD remains range-bound against yesterday’s session highs following the post-FOMC Dollar surge. The spike higher in oil yesterday offset by the spike in USD to leave CAD lower despite having traded firmer over recent sessions.

Technical:1.3260 provides decent resistance as anticipated as this area contains upside potential for another leg of corrective downside. A close above 1.3280 eases bearish pressure and resets focus on the 2015 highs and stops above.

Interbank Flows: Bids 1.3090 stops below. Offers 1.3260 stops above
Retail Sentiment: Bearish
Trading Take-away: Sell a double top test and hold against 1.3280 for another leg lower

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