New York Forex Report: GBP Starts The Week Under Pressure Ahead of BOE

New York Forex Report: GBP Starts The Week Under Pressure Ahead of BOE

New York Forex Report: Over a quiet data session the UK Pound was under pressure during the European morning on Monday as traders anticipate further easing to come at the BOE July meeting on Thursday. Markets are looking for a 25bos cut though some analysts warn of a potentially bigger reduction. The BOE will need to take decisive action to convince markets they are able to effectively backstop the economy in the wake of Brexit.

FX Majors: EUR remains under pressure as traders anticipate further easing in coming months. GBP UK’s visible trade deficit widened to £9.9b in May, rising from a shortfall of £9.4b previously due to larger decrease in exports than the decrease in imports. closed higher at 1.2954 in choppy trading on Friday and it was slightly above a 31-year low of 1.2801, having put in its worst three-weekly performance since the 1992 crisis, following Britain’s shock vote to leave the European Union. Markets will keep the eye on BoE interest rates decision due this Thursday. It is widely expected that BoE would launch a new easing cycle, including cutting the interest rates at their meeting, and leave the door open for more to come. JPY Japan’s current account surplus dropped to 1.809 trillion yen in May (April: 1.878 trillion yen) due to smaller surplus from goods and services trade. Business survey of economic activities in June showed that growth continued to be on a moderating trend, matching a similar gauge in May. The index slipped from 43.0 in May to 41.2 in June while a second survey on business outlook in the near term also fell from 47.3 in May to 41.5 in June. With Japan ruling LDP-Komeito coalition left with 2/3 majority in Sunday Upper House elections, PM Abe stated that ust do what’s needed to beat deflation, to create new-powerful line-up in cabinet to promote economic policies. US labour market data in June painted a less gloomy picture; nonfarm payrolls jumped 287k, up from a downwardly revised 11k and bested economists’ estimate of a 180k increase. Unemployment rate rose 0.2% to 4.9%, though participation rate inched 0.1% higher to 62.7%. Wage gains slowed to 0.1% MOM. USD climbed on the back of firmer US data, but the USD Index slipped 0.03% to 96.30 at closing after fading the jump in US session on the back of gains in major components GBP and JPY.

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

Technical: Range trade persists, 1.12 resistance 1.10 support, over 1.12 sets target at symmetry swing resistance sited at 1.13, below 1.10 opens 1.09 reaction lows.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Bears have the ball while 1.3120 near term resistance rejects upside reactions. Next downside objective is equality swing objective sited at 1.2720
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Retest of reaction lows attracts anticipated buying interest. A sustained move through 103.50 is required to ease immediate downside pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Next downside level to watch is 107 with 115.50 near term resistance now. A close over 116 would ease near term bearish bias. Near term support is sited at 110.60, with symmetry swing resistance sited at 113.30
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD rally remained intact on Friday despite the better than expected US jobs report as the US dollar was broadly weaker and that the safe haven flow remained supportive of precious metals. The gold price climbed by US$5.88 to US$1,366.33 on Friday. Oil prices ended higher on Friday (8 Jul) after the US jobs report but oil was still weaker for the week, the third weekly decline in the last 4 weeks. The US Nymex WTI futures rose by US$0.27 to US$45.41. AUD hit an intraday high of 0.7572 and markets believe that the return of risk appetite could see AUD outperform in the short-term. S&P said on Friday that it would be watching the Australian government’s mid-year review in December and its 2017/18 budget next May to see improvement on tackling the deficit when deciding whether to downgrade its rating. CAD dipped against the USD on Friday after data showed the domestic economy unexpectedly shed 700 jobs while US employment growth surged in June. The USDCAD pair hit an intraday high of 1.3089, which was the highest level since 28 June. Markets will focus on the BoC interest rate policy meeting due this week. Markets believe even though the BoC probably to hold its target rate steady at 0.5%, they should still be very cautious amid the weaker-than-expected indicators released last week.

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

Technical: Breach of .7480 the midpoint of the broader .7660/.7300 range places renewed emphasis on a test of upper end of the range. Intraday support is sited at .7430, below here opens move back to .7300 range support.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Range trade persists 1.30/1.28. While above 1.28 expect breach of 1.31 resistance, below 1.28 opens broader 1.2660 support
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Bulls now target 1391 with 1334 near term support now. Only below 1300 concerns near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Another sub 46 close threatens medium term bullish bias, below 44 opens 41.87 as the next pivotal downside objective.
Retail Sentiment: Bullish
Trading Take-away: Sidelines