New York Forex Report: Trump Travel Ban Triggering Protectionist Concerns

New York Forex Report: Trump Travel Ban Triggering Protectionist Concerns

New York Forex Report: A busy week of data and central bank meetings lie ahead of the markets, with the BoJ, Fed and the BoE all meeting in the next few days. No policy changes are expected to result from any of these meetings but markets may expect the BoJ to reiterate its strategy of anchoring long-term JGB yields, the Fed to provide further insight into how it sees the economy (and, possibly, policy) evolving in the next few months while the BoE may have to acknowledge the upward tilt in inflation and what that may mean, if anything, for the policy outlook. The USD is starting the week on a mixed note but global risk sentiment appears to have been jolted somewhat by the weekend focus on President Trump’s moves on immigration which reports suggest have boosted concerns about protectionism. The JPY has caught a modest, safe-haven bid from the broad drop in global stocks and is out-performing. The GBP is under-performing through European trade.

FX Majors: EUR In the Eurozone, HICP inflation is forecast to rise to 1.5% in January, closer to the ECB’s target of just below 2%. Although, core-inflation still remains subdued. Meantime, Eurozone GDP is expected to have grown by 0.5% in Q4, from 0.3% in Q3. Both results could help to provide some support to the euro. GBP In terms of the BoE, the better than expected performance of the UK economy means that we may see the Bank upgrade the outlook for GDP contained in this week’s ‘Inflation Report’. They should also continue to suggest that inflation will exceed its 2% target for a period. However, the BoE will likely continue to highlight the downside risks to the economy. Thus, the Bank should retain its assessment that policy can respond “in either direction”. JPY This week’s BoJ MPM (Tuesday) will be a key focus. The BoJ is widely expected to keep its policy unchanged and we look for the BoJ to revise up its growth forecast while maintaining its inflation outlook largely unchanged.

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: Neutral
Trading Take-away: Neutral

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: Neutral
Trading Take-away: Neutral

EURJPY
Outlook: Short Term (1-3 Days): Bullish – 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: Bearish
Trading Take-away: Long

Commodities FX: GOLD The USD denominated non-yielding asset retreated amid a stronger USD tone and rising Asian and European bond yields . OIL prices rose, amid rising optimism over members of the Organisation of the Petroleum Exporting Countries cutting output, however, continued concerns over an increase in US oil production continue to cap gains. AUD Australia releases December trade data and building approvals (both Thursday). With commodity prices remaining elevated and growth in China remaining steady, markets expect Australia’s trade balance to remain in surplus territory. CAD BOC Governor Poloz is due to speak on Tuesday and the US Fed announcement is on Wednesday, which will likely highlight the ongoing policy divergence between the two central banks.

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

Technical: 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): Bearish – 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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