New York Forex Report: Volatility & Volumes To Tick Up

New York Forex Report: Volatility & Volumes To Tick Up

New York Forex Report: The end of summer relative calm will be disrupted by important event risk in the next few days. Central bank meetings in Canada (Wednesday) and the Eurozone (Thursday) along with the Fed’s Beige Book release (also tomorrow) and various Fed speakers (Williams today, Rosengren Friday, for example) will help shape market moves ahead of the September 21 FOMC meeting. The USD is continuing to suffer from a post employment hangover; with no definitive signal from the data that September is really “live” for a rate tightening, markets are reducing long USD exposure across a broad front. It is worth noting a considerable tightening in global USD liquidity which is clearly starting to bite, with cross currency basis swaps widening and LIBOR rates rising to a seven year highs this should help keep the USD underpinned.

FX Majors: EUR Euro zone’s retail sales grew 1.1% MOM in July, signaling a pick-up in household spending after falling 0.1% MOM in June. The increase was driven by larger business volume at stores selling food, drink, tobacco and petrol stations. Forward looking indicator signals investor confidence rises from 4.2 in August to 5.6 in September, suggesting that domestic demand will likely keep growth supported this quarter. GBP UK services PMI rebounded in August as Brexit shock dissipates. PMI leaped from a seven year low reading of 47.4 in July to 52.9 in August and was the biggest monthly gain in two decades. While long term risks remain a major concern, August services and manufacturing PMI prints posted tentative signs of contained risks from Brexit fallout in the short term. JPY Bank of Japan Governor Haruhiko Kuroda signalled its already massive stimulus programme would continue, but there was nothing explicit enough to suggest an expansion is imminent. Japanese Prime Minister Shinzo Abe said yesterday that he stressed at the G20 summit that risks in global growth must be avoided and that he wanted to spur the adoption of a global trade pact.

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

Technical: EUR tests and holds symmetry swing support sited at 1.1125. Over 1.1250 brings last weeks highs back into play at 1.1366. Failure below 1.1120 opens 1.1050 next.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Rejection from initial pivotal test of 1.3372 next as 1.3260 supports 1.3470 is the next upside objective. Only failure below 1.3185 concerns near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Anticipated test of offers over 104 reject the initial foray above the figure, as 102.80 supports 105.50 is the next upside objective.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: As 114.70 supports bulls target 117, failure below 114.50 opens a retest of pivotal support at 114.
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD rose on Monday as the dollar’s drop post a disappointing employment report extended, with the bullion rising $1.87 (+0.14%) to $1327.08 per ounce. Oil traded higher on news that Saudi Arabia and Russia were due to make a joint statement on cooperation to support oil markets but pared gains after the announcement was made. For the day, WTI crude futures added $0.58 (+1.31%) to $45.06 a barrel. AUD Australia’s central bank remain on hold with its record low cash rate at 1.5% after two cuts this year. Low inflation and preference for a weaker currency to spur exports have prompted the central bank to cut rate previously and while downside risks are contained at this juncture. CAD strengthened by the most in five weeks against the USD on as domestic figures disclosed a jump in exports and oil rose. Canada’s trade deficit in July unexpectedly shrank to C$2.49 billion from a record C$3.97 billion in June as exports jumped by 3.4%.

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

Technical: Support at symmetry swing .7501 capped downside correction and set a base to remove .7600 resistance opening a move back to .7750 as the next upside objective. Only a close below .7500 would concern the near term bullish bias
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Failure at 1.2960 support opens a move back to test bids at 1.2830, near term resistance is sited at 1.3040
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1301 AB=CD equidistant swing support has provided anticipated base. Near term resistance at 1333. Only below 1300 concerns near term bullish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Offers at anticipated resistance 46.44 stall the advance as this area continues to reject expect a grind lower to 41.00. Over 46.60 opens 47.50 as the next upside objective.
Retail Sentiment: Bullish
Trading Take-away: Short