New York Forex Report: USD Poorest Quarterly Performance In Seven Years

New York Forex Report: USD Poorest Quarterly Performance In Seven Years

New York Forex Report: It is month and quarter-end, so flow will probably dominate this afternoons price action. Around this though the change in tone from the ECB, BoE and BoC in the last week or so has ignited the bond markets and put equities on edge. Bond yields in Europe and the UK have rapidly shifted back towards the seven month range highs and we are now watching to see if they develop into a new trend breakout phase and support their currencies. Interestingly, on that point, GBP so far has not reacted as much as the bond market, especially versus Europe. UK Domestic data was below forecast this morning especially household disposable income which declined for the third straight quarter. EUR has pulled back on profit taking ahead of the holiday weekend, European data remained robust this morning, Eurozone inflation printed above expectations, with German retail sales printing a robust 0.5% above forecast of 0.3%. The key data release into the North American session ahead of the extended holiday weekend, is the FED’s preferred inflation measure of Personal Income and expenditure.

USD The US expanded 1.40% QoQ in the first quarter followed 2.10% QoQ expansion in 4Q16. Slower growth was mostly due to the decline in government consumption (1Q: -0.16% QoQ vs 4Q: +0.03% QoQ), compounding the impact of moderation in personal consumption (1Q: +0.75% QoQ vs 4Q: +2.40% QoQ) and private investment (1Q: +0.60% QoQ vs 4Q: +1.47% QoQ).

EUR Business and consumer confidence remained firm in the euro area in the face of Brexit negotiation, reflecting optimism that the bloc was on track for sustained economic recovery going into the second half of the year. Economic confidence and business climate indicator rose to 111.1 (May: 109.2) and 1.15 (May: 0.90) respectively while consumer confidence posted the smallest negative print since April 2001, suggesting that consumption will buoy GDP growth as recovery remain on track.

GBP Britain’s consumer borrowing surged to a six month high in May, underscoring BOE’s concern of mounting debt as weak Sterling pushed inflation to a multi- year high. Household borrowing climbed by £ 0.20 billion to £ 1.70 billion the month before Brexit negotiation began, suggesting that slow increase in real wage dragged by high inflation had dampened purchasing power even as spending remained strong..

JPY Japan’s small business confidence index ticked up to 49.2 in June, rising from 48.9 in May to its highest in three months, a sign businesses are anticipating pick up. There needs to be more convincing data as retail sales in May softened on an annual basis, growing just 2.0% YoY from 3.2% in April, while sales fell 1.6% MoM after rising 1.4% previously, and both measures were below market expectations

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

Technical: 1-3 Day View – 1.1430 upside objective achieved the weekly close will be key now as price is testing pivotal symmetry and trend line resistance, as 1.1350 supports bulls target 1.1616 as the next upside objective only a daily close below 1.1290 concerns the near term bullish bias.

1-3 Week View – While 1.0830 supports 114.30 becomes the primary upside objective. A weekly close over 1.1450 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – As 1.2960/40 supports on an intraday basis 1.3048 is the next upside objective . Only a closing breach of 1.2710 concerns the near term bullish bias.

1-3 Week View – The weekly failure to close above 1.3045 ahead of the broader symmetry swing objective sited at 1.3238 suggest underlying weakness persists 1.2450 becomes pivotal for the medium term perspective
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – The daily closing breach of 111.80 level resets focus on upside objectives principally 114.35, near term support is now sited at 111.80/60, only below 111.20 would arrest the advance and return to 110/112 range.

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 – Bullish expansion from consolidation targets 129.44 as the primary upside objective, support moves to 127.40/20, only below 125.80 concerns near term bullish bias.

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, resetting focus on pivotal 124.40 the weekly breach of this level opens 129.44 as the broader upside objective.
Retail Sentiment: Bearish
Trading Take-away: Long

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