London Forex Report: USD Pressured Ahead Of FOMC Minutes
Littlefish FX | Oct 08, 2015 07:25AM ET
EUR/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR eased slightly as German industrial output and French imports slumped, raising growth concerns and increased likelihood of ECB action. Additionally Merkel & Hollande, in a rare joint address to the EU Parliament, highlighted the many challenges facing the block. Traders are speculating on the hints of further easing from the European Central Bank which might be revealed today in its Monetary Policy meeting minutes.
Technical: contracting range persists, near term levels to watch are for a close above 1.1290/1.1310 area now the catalyst for renewed topside price action. In turn 1.1170 90 downside break can open up a move potentially to the key 1.1110 support level
Interbank Flows: Bids 1.1130/50 stops below. Offers 1.13 Stops above.
Retail Sentiment: Neutral
Trading Take-away: Sidelines for now
GBP/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: No change in policy is expected at the BoE meeting. It was not long ago that BoE Governor Mark Carney noted “The prospect of sustained momentum in the U.K. economy and the gradual firming of underlying inflationary pressure will likely put the decision as to when to start the process of gradual monetary policy normalization into sharper relief around the turn of this year.” But a couple of days afterward, his Chief Economist expressed doubts
Technical: The close above 1.53 opens 1.54 as the next upside objective. While intraday downside reactions are support towards .15240 near term upside remains in tact, a failure here would target a retest of recent lows.
Interbank Flows: Bids 1.5230 stops below. Offers 1.54 stops above
Retail Sentiment: Bearish
Trading Take-away: Buy pullbacks against 1.5240 for 1.54
USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: The BoJ made no changes to its policy settings on Wednesday despite the sluggish economy and inflation running well below the central bank’s target rate. However, recession worries will likely keep the BoJ under pressure to continue with stimulus and easing policies at an upcoming board meeting on 30 October, when the BoJ is expected to trim its long-term economic and inflation forecasts
Technical: Continues to trade in contracting range, play range 121.50 the offer and 118.50 the bid until broken.
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Interbank Flows: Bids 118.50/30 stops below. Offers 121.50 stops above
Retail Sentiment: Neutral to bullish
Trading Take-away: Sidelines for now
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Bank of Japan left monetary policy unchanged, missed some market participants’ expectation of further QQE. On the domestic data front Japan Leading Index in August announced as 103.5, outperforming the market forecasts, Japan Machine Orders numbers were released as -3.5%, missed market expectation of 3.5%, suggesting Japan’s economy is still faltering
Technical: 134 intraday support to watch a failure here targets a retest of 133 bid. While 134 survives on a closing basis expect renewed upside pressure on 135.60 interim resistance. A close above 136 opens a retest of upper end of the recent range and a retest of offers at 137 next.
Interbank Flows: Bids 134 stops below. Offers 136 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Sidelines for now
AUD/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: Amid temporary pick-up in global risk appetite and commodity prices, the AUD/USD extended its recent upward momentum testing offers above above 72 US cents and registering three week highs. Suspect that gains will be trimmed as markets set sights on FOMC minutes.
Technical: Offers above .72 stall advance on the initial test while .71 supports intraday downside reactions bulls target broader equality corrective objective at .73.
Interbank Flows: Bids .6850 stops below. Offers .7250 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Buy pullback against .7100 targeting .7300
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Fundamental: CAD fell yesterday, breaking its five-day winning streak against the US dollar as the price of oil, a major Canadian export, fell in volatile trading. Crude prices slid after US government statistics revealed a large crude inventory build and surprised the investors. The rally this week was partly fuelled by an report from Energy Information Administration(EIA) which projected that global oil demand for 2016 will grow by the fastest rate in six years.
Technical: Supported on primary test of symmetry objective at 1.30 which is pivotal for trend continuation, a failure below 1.30 suggests the potential for a more significant trend reversal. Near term bearish tend remains intact as offers towards 1.3130 caps corrective upside reactions
Interbank Flows: Bids 1.2950 stops below. Offers 1.3130 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now
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