New York Forex Report: Slow Summer Trade Ahead Of Yellen & BoC

New York Forex Report: Slow Summer Trade Ahead Of Yellen & BoC

New York Forex Report: Quiet trading conditions persist ahead of tomorrow’s key event risk – the BoC policy meeting and Fed Chair Yellen’s congressional testimony. The USD is trading mostly firmer against its G10 peers but movement is relatively limited. The GBP is out performing as investors await comments from BoE Deputy Governor Broadbent while the NZD is under-performing following weak spending data. Ranges remain contained across major and the primary developing market currencies so far. Expect another session of range trading with only second-tier data releases out from the US today; note that Fed Governor Brainard is speaking on monetary policy but she is unlikely to say anything significant in terms of the outlook so as not to overshadow the Chair’s comments tomorrow.

USD Consumer credit in the US increased more than expected in May, by $18.4bn, more than the $12.9bn increase a month ago and against an estimated rise of $13.5b, pointing to signs consumer willingness to spend.

EUR Sentix survey showed that investor confidence in Eurozone dipped in July, with the index sliding to 28.3 from 28.4. Nonetheless, confidence level remains relatively firm as 28.4 is the highest in nearly ten years, not to mention the pullback in July was less than expected.

GBP The UK government is presented its reform bill which rolls back EU common law in the UK, leaving markets to focus on potential vulnerabilities to PM May’s government. UK jobs and wages data due Wednesday are the highlight of a fairly light week for the UK otherwise. BoE’s Haldane and Broadbent speak this morning.

JPY Divergence between lagging and forward indicators emerged in Japan. Machine orders declined further in May, contracting 3.6% MoM after falling 3.1% previously, while a soft growth of 1.7% was expected. Meanwhile, the current account surplus narrowed to 1653.9b in May, down from 1951.9 in April. Even against the backdrop of softer data, Eco Watchers survey returned relatively optimistic results as respondents’ assessment of Japan’s economy improved. This pushed the index on current conditions to 50.0 in Jun from 48.6 in May, beating expected rise to 49.0. The outlook index climbed to 50.5 in Jun, overturning the pessimistic 49.6 level in May.

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

Technical: 1-3 Day View – 1.1430 containing the advance for now as 1.1300/30 supports bulls target 1.1530 as the next upside objective, a daily close below 1.1290 concerns the near term bullish bias and open a test of 1.11

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): Bearish – Medium Term (1-3 Weeks): Bearish

Technical: 1-3 Day View – 1.3048 is the next upside objective, ahead of the pivotal 1.3238, the immediate upside hurdle is sited at 1.2925, a daily closing breach of 1.2810 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: Sidelines

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

Technical: 1-3 Day View – Upside objective 114.35 achieved, potential for profit taking pullback to test near term support toward 113.40 as this contains corrections bulls target 115.50 next, only below 112.10 would concern the immediate bullish bias.

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: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Bullish expansion targets at 129.45 achieved as 129.30 contains corrections bulls target 133.36 as the next upside objective, only below 126.80 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