London Forex Report: US private sector added 214k jobs to payrolls in February against a revised 193k in January, data from ADP showed. The increase was largely driven by job growth in the services industry, which added 208k jobs in Feb. This points to continued improvement in labour market conditions that would continue to underpin consumer spending ahead, and raises the bar for Friday’s nonfarm payrolls release.
The Fed Beige Book revealed that economic activities in most districts continued to see expansion, and in line with recent flow of data, household and consumer spending picked up in most districts. Manufacturing, however, remained flat in most districts, taking the hit from a stronger dollar and subdued global demand. The latest assessment from Beige Book affirmed that economic growth remained moderate in February in spite of prevailing headwinds. USD Index tumbled in US trade on the back of firm risk appetite, closing 0.14% lower at 98.21 after erasing early gains from better than expected US data.
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR lifted up to 1.0879 from a one-month low of 1.0823. Traders stayed cautious of buying the euro after another top European Central Bank (ECB) policymaker hinted at possible action next week. Executive Board member Benoit Coeure said eurozone banks can deal with rock bottom interest rates and actually benefit from the central bank’s efforts to support growth and inflation.
Technical: While prior support at 1.0950/70 acts as intra day resistance, bears target prior range support at 1.08. Only a close over 1.1080 eases immediate downside pressure.
Interbank Flows: Bids 1.08 stops below. Offers 1.0950 stops above.
Retail Sentiment: Bullish
Trading Take-away: Sidelines
GBP/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: GBP rose to a nine-day high as traders trimmed bets against the currency in the absence of fresh clues from polls on whether Britain is likely to leave the European Union. The pound rose more than 1 percent against the euro, on the expectations that the European Central Bank is likely to ease policy aggressively next week to lift falling prices and growth.
Technical: While 1.3980 acts as intraday support, expect a continued grind higher to test pivotal 1.4235. Only a close over 1.4250 eases immediate downside pressure.
Interbank Flows: Bids 1.3950 stops below. Offers 1.4150 stops above.
Retail Sentiment: Bearish
Trading Take-away: Long
USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: USD retreated back to near 113.50 against JPY after losing grip of a two-week high of 114.55, which is the highest since February 16. Traders took profits shorting JPY as US ADP employment data printed 214k, better than the expectations of 185k. This may imply a positive nonfarm figure due this Friday.
Technical: Bulls will be looking for 112.50 to continue to support. Expect a further leg of corrective gains, to retest the broken neckline support at 115/116. Failure at 112 open 11 again.
Interbank Flows: Bids 112.50 offers below. Offers 114.50 stops above
Retail Sentiment: Neutral
Trading Take-away: Neutral
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: It has been a whippy week for EUR/JPY, albeit trading inside a broad 124-122 range. The pair has recovered almost 80 pips from NY lows, back towards 124.00 as cross-JPY demand lends some support. Interbank reports suggest exporter supply still dominant in rallies (especially towards 124.50), but dips should also find support ahead of the ECB and BOJ policy decisions in the next couple of weeks. Medium term remains on the downside as the BOJ likely stays on hold in the next meeting.
Technical: While 123 offers intraday support, expect a continued grind higher to test offers at 125. A failure at 123 refocuses bearish sights on the psychological 120 en route to a weekly downside objective at 118/117. Only a close over 125.10 eases bearish bias.
Interbank Flows: Bids 122 stops below. Offers 125 stops above.
Retail Sentiment: Neutral
Trading Take-away: Neutral
AUD/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: The Australian dollar recorded a 2016 peak and climbed on the back of surprisingly strong domestic economic data. The Aussie reached 0.73 level, its highest since 4 January after figures showed that the fourth quarter economic growth unexpectedly picked up to a healthy 3.0 percent annual clip..
Technical: Testing range resistance at .7300. While .7250 supports intraday expect further upside pressure targeting .7385 next. Only a failure at .7100 pivotal support threatens bullish bias.
Interbank Flows: Bids .7250 stops below. Offers .7350 stops above.
Retail Sentiment: Bearish
Trading Take-away: Long
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: CAD weakened slightly against the USD, but losses were trimmed as oil prices turned higher while the currency still held near a 12-week high. Oil prices firmed as investors banked on production limit plans to counter record high US crude stockpiles, keeping the expectations that the markets had bottomed from the sell off that began nearly two years ago.
Technical: While USD/CAD trades sub 1.3510, downside pressure remains the driver with bears focusing on a AB=CD ultimate downside objective at 1.2966. The next interim support level to watch is is 1.3350.
Interbank Flows: Bids 1.3350 stops below. Offers 1.3550 stops above
Retail Sentiment: Bullish
Trading Take-away: Short
