New York Forex Report: Risk Sentiment Improves
Littlefish FX | Oct 05, 2015 08:23AM ET
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Better risk sentiment over the European session saw European equity markets trading higher with EURUSD lower consequently. A string of sub-par PMI data added pressure also with investor expectations leaning further towards increased ECB stimulus. US Services and Non-Manufacturing PMI’s are the key data releases over the New York session at 1445GMT & 1500GMT1 .
Technical: Headline risk volatility spike sees Euro trade through 1.13 resistance but offers ahead of 1.1350 repel advance, overnight retest of bids below 1.12 attracts buyers. While 1.12 supports expect another test of 1.1350 offers. Failure at 1.12 open retest of 1.1150 next
- Interbank Flows: Bids 1.1130/50 stops below. Offers 1.1350 Stops above.
- Retail Sentiment: Neutral
- Trading Take-away: Sidelines for now
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: UK services PMI printed a two and half year low of 53.3 vs the expected 56 sending GBPUSD sharply lower following the data release with investor expectations skewed firmly towards a Dovish BOE statement on Thursday.
Technical: Testing offers towards 1.5250 resistance tone remains bearish while 1.53 caps the upside reaction. While 1.53 stems the advance on a closing basis next downside objective is a test of 1.50 psychological support. A close above 1.53 opens 1.54 as the next upside objective.
- Interbank Flows: Bids 1.5080/60 stops below. Offers 1.5250-1.53 stops above
- Retail Sentiment: Bullish
- Trading Take-away: Sidelines for now
USD/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: The US dollar gained against the Japanese Yen over European trading with traders focusing more on the possibility of further BOJ intervention than the absence of a US rate hike. BOJ monetary policy statement will be closely watched on Wednesday.
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Technical: Bids toward 118.50 hold strong once again, now trading back to the midpoint of the recent range. For now play range 121.50 the offer and 118.50 the bid until broken.
- Interbank Flows: Bids 118.50/30 stops below. Offers 121.50 stops above
- Retail Sentiment: Neutral
- Trading Take-away: Sidelines for now
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: A rebound in commodity and equity markets following Friday’s US data miss has bolstered risk sentiment into the start of the week with broad JPY weakness seen over European trading as safe-haven inflows reduce. Initial gains over the session were conceded as equity markets continued to strengthen leading to EUR weakness.
Technical: 134 intraday support to watch a failure here targets a retest of 133 bid. While 134 survives on a closing basis offers at 135 and stops above. A close above 135 opens a retest of upper end of the recent range and a retest of offers at 137 next.
- Interbank Flows: Bids 143 stops below. Offers 135.10/30 stops above
- Retail Sentiment: Bearish
- Trading Take-away: Sidelines for now
AUD/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: The Aussie benefited from the rebound in commodity and equity prices over the European session though upside likely to remain capped ahead of the RBA which poses downside risks.
Technical:Rally stalls ahead of .71 resistance. While offers at .71 cap upside attempts bears targets new year to date lows. A breach of .71 resistance targets a retest of offers towards September highs towards .7270.
- Interbank Flows: Bids .6850 stops below. Offers .7100 stops above
- Retail Sentiment: Bullish
- Trading Take-away: Sidelines for now
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Fundamental: USD/CAD has seen a sharp correction to the bullish trend bolstered by last week’s in-line GDP data and broad USD weakness. Oil prices have remained firm over European trading underpinning the Loonie with traders looking ahead to Friday’s Unemployment rate.
Technical: Testing downside symmetry objective at 1.31 while this area supports potential for trend continuation a failure here confirms a shift in tone a and focus shifts to larger symmetry and psychological support at 1.30
- Interbank Flows: Bids 1.31 stops below. Offers 1.33 stops above
- Retail Sentiment: Bullish
- Trading Take-away: Sidelines for now
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