All eyes on IMF decision on whether to approve the Chinese yuan status as a reserve currency today. Earlier comments from the IMF director Christine Lagarde that the currency qualified as “freely usable” implied that highlight at today’s meeting will be on the details on how the fund has arrived on the decision such as the weighting that yuan will be assigned within the basket and potentially more reform conditions before the full implementation in September next year. USD strengthened the USD Index jumped strongly in European trade on the back of rising demand as equities and commodities declined before steadying in US trade to close 0.23% higher at 100.02.
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR rebounded in US trading session to move back around 1.06 after falling near seven-month lows at 1.0567 last Friday. The single currency is down 3.7 percent versus the USD so far this month as markets expect the ECB announcing a loosening of monetary policy at its 3 December meeting.
Technical: While 1.0620 caps intraday upside corrections, bears target a test of 1.05 next ahead of an assault on year to date lows. Only a close above 1.07 eases immediate downside pressure.
Interbank Flows: Bids 1.0550 stops below. Offers 1.07 Stops above.
Retail Sentiment: Bullish
Trading Take-away: Sidelines
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: GBP fell to a three-week low against the USD on Friday after figures confirmed the British economy slowed in the third quarter, boosting market expectations that the Bank of England will not raise interest rates any time soon. The UK economy grew just 0.5 percent from July to September, slowing from 0.7 percent the previous quarter.
Technical: While 1.5090 contains upside reactions expect a test of of bids at 1.50 as the next bearish objective. Only a close above 1.52 eases immediate bearish bias
Interbank Flows: Bids 1.50 stops below. Offers 1.51 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines
USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: USD/JPY closed at 122.82 last Friday while the US Index hit a fresh 7-month high helped to lift the pair to an intraday high of 122.87 in late US trade. The release of Japanese October retail sales came in at 1.8% m/m vs -0.1% previous and industrial production which came in at 1.4% m/m vs 1.1% , data hardly impacted the pair this morning which is trading around the 122.80 level.
Technical: While 122.50/30 supports downside reactions, market structure remains bullish to test 2015 highs next. A failure at 122 opens a test of 121.40 support next ahead of pivotal 120.
Interbank Flows: Bids 122 stops below. Offers 124 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Japanese retail sales rose 1.8% y/y in October. The rebound in retail spending will come as a huge relief for policymakers who have been trying to spur demand through extremely loose policy settings for several years now. Pair remains weighed by negative EUR cross flows.
Technical: While 131.30 caps upside reactions expect a sustained break below 130 to confirm a retest of 2015 lows. Only a close above 132.50 eases immediate bearish pressure. Intraday initial upside hurdle is 130.50 while this caps upside corrections expect further grind lower to retest and break 129.70 lows.
Interbank Flows: Bids 130.50 stops below. Offers 132.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines
AUD/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: AUD closed at 0.7192 and touched a one-month peak of 0.7283 last Wednesday, partly due to expectations the Reserve Bank of Australia (RBA) is in no rush to cut interest rates in the near future. The central bank’s next policy meeting is tomorrow and investors expect the RBA to keep interest rates at a record low of 2.0 percent.
Technical: While .7170/50 remains the bid zone expect grind higher to test .7350 area next, only a close below .7150 concerns near term bullish bias.
Interbank Flows: Bids .7150 stops below. Offers .7300 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Fundamental: CAD weakened against USD last Friday, stressed by a drop in crude oil prices and the Canadian producer prices fell more than expected. Crude oil futures fell as disappointing Chinese figures and worries over a global energy supply glut overshadowed geopolitical concerns.
Technical: Bulls have the ball while 1.3280/60 supports intraday downside. A close below 1.3220 would ease the near term bullish bias and suggest a broader correction is underway.
Interbank Flows: Bids 1.3250 stops below. Offers 1.34 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines
