New York Forex Report: USD Consolidating Weekly Gains

New York Forex Report: USD Consolidating Weekly Gains

New York Forex Report: The USD is ending the week on a firm note and has made clear progress against the EUR, driving spot below 1.09 and leaving the market poised to close out Friday at or near the lows of the week. Yesterday’s ECB meeting removed the notion of any policy taper from the market’s mind, allowing US-Eurozone shortterm spreads to nudge a little wider again. But the yield gap remains close to recent peaks and the absence of any US or major Eurozone data over the past 24 hours suggests the EUR slide is becoming as much a momentum trade as a fundamental one. On the day, the JPY is out-performing modestly as equity markets turn mixed (Japanese markets dipped on news of a 6.6 magnitude earthquake in western Japan)

FX Majors: EUR ECB maintained its policy stance as widely expected. Main refinancing rate, deposit rate and lending rate were held at 0.00%, -0.40% and 0.25% respectively. Asset purchase target also stayed pat at €80 billion per month. President Mario Draghi signaled that bond tapering may occur before the QE program stops, indicating that an extension to the maturity of the stimulus program is on the table. On the data front, current account surplus rose to €29.7 billion in August (July: revised to €27.7 billion). GBP UK retail sales grew at a slower pace of 4.10% YOY in September after a climb of 6.60% YOY in August. The headline print was dragged by slower sales in food stores and petrol stations and compounded by steeper drop in textile, clothing & footwear sales. JPY Japan’s Nationwide department sales dropped 5.00% YOY in September and extended the streak of negative growth since March this year. Adding to signs of weak domestic demand, machine tool orders tumbled 6.30% YOY in September (August: -8.40% YOY).

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

Technical: 1.1035 caps correction bears seek the next downside objective sited at 1.0845. Near term resistance is sited at 1.0950, medium term resistance is sited at 1.1120 only over 1.1220 eases bearish bias.

Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: As 1.23 rejects near term corrective advances bears target a retest of 1.20. Medium term resistance is sited at 1.2330. Only a close over 1.25 eases bearish pressure.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Bullish attention on the upside equidistant swing corrective objective at 104.86 near term support is at 103.30 only a close below 102.80 eases bullish pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 114.50 caps upside expect s test of 113.30 a breach of which suggests an early reversal to trend opening 112 next.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD price declined on Thursday after 3 straight sessions of gains due to a rebounding US dollar. The gold price fell by US$2.30 to US$1,265.60 on Thursday. OIL prices ended markedly lower on Thursday (19 Oct) as investors took profit after US crude oil price settling at a 15-month high on the previous session. The US Nymex WTI futures decreased by US$1.17 to close at US$50.43. AUD Australia’s unemployment rate ticked down 0.1 ppt to 5.60% in September after a revision to August reading. The headline print improved despite the 9.8k drop in number of jobs filled amid lower labor force participation rate (September: 64.50% vs August: 64.70%). On a separate report, business confidence index climbed to 5 in 3Q (2Q: 3), rising to the highest level in the past three quarters. CAD pressure remains on the downside, with yield differentials favouring the USD. More recently, Thursday’s solid US existing home sales and Philly Fed and a reversal in the price of OIL have been seen as the primary drivers of Canadian Dollar weakness.

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

Technical: Sharp rejection from pivotal 7730 near term support is sited .7600. A close over .7730 reverses bearish bias and focus shifts to .7830.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1.3360 equidistant AB=CD is the next upside objective, 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: Anticipate test of 1229 symmetry swing support failure here lets bears target 1200 as the next downside objective, near term resistance is sited 1276 ahead of pivotal 1300.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Equidistant swing objective sited at 52.40 is the primary upside objective as 49.90 supports the advance ,only below 48.00 would suggest false upside break a continuation of a more complex corrective pattern
Retail Sentiment: Bearish
Trading Take-away: Long