New York Forex Report: Euro Tests Bids Sub 1.05

New York Forex Report: Euro Tests Bids Sub 1.05

New York Forex Report: Since the UK’s decision to leave the EU, GBP has not traded as one might have expected given the subsequent out performance of UK data. Citi’s UK Surprise Index shows that economic releases have beaten consensus expectations to a degree not seen since mid-2013. Last Friday’s retail sales was, perhaps, the first chink in the armour of the UK economy eliciting a sharp negative reaction in GBPUSD although, given the usual seasonality issues around this data point, it is certainly not a decisive sign that the strength of the UK consumer is waning yet. Despite the initial fall, the currency has recovered well in recent sessions, retracing the decline in its entirety, back up to 1.2480. Today’s second estimate of UK Q4 GDP 0.7% q/q (from 0.6% q/q), follows strong industrial and construction output for the quarter, hwever, GBP lost ground on weak UK business investment data but remains within recent range. In the US, recent relatively hawkish comments from Fed officials will provide the context for the FOMC minutes release this evening. Fed Governor Powell will also be speaking. In the Euro area further improvements in the closely watched German IFO survey, especially after yesterday’s resilient flash PMI results should have provided some support for EUR but the single currency remains pressured by political risk testing bids sub 1.05.

FX Majors: EUR Eurozone’s Markit manufacturing PMI rose to 55.5 in February (January: 55.2), marking its highest level in 70 months. Services sector PMI also nudged higher, climbing 1.9 point to 55.6 in February. Services and manufacturing indicators showed that firms were employing more workers this month as business orders expanded at quicker pace. GBP UK’s posted a surplus of £9.4 billion in January, marking its biggest surplus since May 2001 after a deficit of £4.7 billion in December. Prior to the Budget announcement on March 8, data from the Office for National Statistics showed that revenue rose 5.30% while spending climbed 5.40%. JPY Japan’s all industry activity index slumped 0.30% MoM in December, suggesting a broad based slowdown in the third largest economy in the world. Followed a 0.40% MoM increase in November, underlying details showed that the construction and services sectors were contracting from a month ago, leading to the decline in the headline index. Matching the trend in December, a report from Japan’s Department Store Association showed that retail sales slipped 1.20% YoY to 520.9 billion yen in January, affirming sluggishness in consumer spending despite massive government stimulus.

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

Technical: Expected retest of 1.0521 base plays out potential here for interim double bottom, a breach opens a move to 1.0450 next, intraday 1.0575 is the first upside hurdle, only over 1.0635 arrests bear term bearish bias.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Equidistant swing objective at 1.2679 capping corrective advance. Near term support sited at 1.2345 survives on a closing basis with range resistance sited at 1.2580
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Only a 112 sustained breach will open 110.70 symmetry swing support underpinned by 109.90 50% retracement of the move from August 2016 lows. Near term resistance sited at 113.80, a close over 114.50 reasserts upside targets primarily at 115.50
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The failure below 120.40 opens 118.70 as the next downside objective. Near term resistance sited at 120.50 a close over 121.50 stems near term selling pressure.
Retail Sentiment: Bullish
Trading Take-away: Short

Commodities FX: GOLD price eased slightly amidst a broadly stronger US dollar and US Fed rate hike expectations. This gold price decreased by $0.10 to close at $1,237.50 OIL prices ended higher on Tuesday (21 Feb) after comments from the OPEC secretary that the group will decide on extending its recent production cuts decision based on how far global inventories has declined. AUD Reserve Bank of Australia (RBA) Governor Philip Lowe delivered a speech in Sydney ahead of his testimony to the parliament committee on Friday (24 Feb). In his speech, Lowe signaled the solid performance of Australia’s labor market is allowing RBA to extend an interest-rate pause highlighted downside pressure on inflation could be more persistent than assumed. CAD strength was capped over the long weekend by the widespread buying of USD. CAD tested a fresh two week low yesterday, completely ignoring the impressive gains in oil, suggesting a shift in focus towards monetary policy divergence.

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

Technical: The next upside objective is sited at .7750 as price continues to consolidate at elevated levels. Near term support is sited at symmetry swing level .7600 ahead of pivotal .7449
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1.3150 resistance eroded, over 1.32 opens a move back to test 1.3370.Price action remains erratic as price attempts to base above pivotal 1.30. Near term support is sited at 1.3050, failure here opens a retest of 1.2967
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The 1225 upside breach confirmed the anticipated move to 1245 as 1218 supports expect a retest of last weeks highs, a failure below 1206 opens a retest of 1180.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

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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