London Forex Report: While factories conditions in Dallas and Richmond districts remained weak, conditions in Kansas City and Chicago gathered steam in June and showed diverging pace of recovery in the US manufacturing sector. Separately, jobless claims rose 10k to 268k last week, continued to underscore strength in the US labour market. USD ended mixed USD Index dipped in early trade on extended retreat in refuge demand but rebounded in US session to strengthen 0.39% on the back of renewed weakness in major components EUR, GBP and JPY.
FX Majors: EUR Unnamed sources also reported that the ECB is set to weigh looser rules for QE. The EUR fell from 1.1100 to 1.1025, but retraced some of the move after the ECB would not comment. GBP BOE governor Mark Carney signaled that the central bank could announce additional stimulus measures in the upcoming policy meetings as early as July. “Over the horizon, there’s Financial Policy Committee decisions next week, there are two monetary policy committee meetings this summer, July and August, and I would look at those as a bit of a package, as meetings”. Traders are expecting BOE to cut rate after the comments and if this were to happen in July, it is definitely much sooner than we had expected. JPY Japan’s housing starts growth was surprisingly strong in May, climbing 9.8% YOY in May (April: +9.0% YOY) but other data remained mixed. Household spending fell 1.1% YOY in May (April: -0.4% YOY), which marked its third consecutive declines and along with extended deflation (CPI: -0.4% YOY in May vs -0.3% YOY in April) reflected sluggishness in domestic demand. On the positive side, surveys indicated that outlook for the manufacturing sector improved in 2Q. The index rose from 3 in 1Q to 6 in 2Q and was broadly in line with the gradual pick up in global manufacturing.
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: While 1.1170 caps upside reactions expect a grind south to retest the spike low of Friday, a close over 1.12 is required to ease near term bearish bias. Intraday support is sited at 1.1030/50
Retail Sentiment: Bearish
Trading Take-away: Long
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: Bears now targeting a test of psychological 1.30 level. Bears have the ball while 1.3698 symmetry resistance remains in place. Inraday support is sited at 1.3280
Retail Sentiment: Neutral
Trading Take-away: Neutral
USD/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: A sustained move through 103.50 is required to ease immediate downside pressure. Intraday support is sited at 101.40
Retail Sentiment: Bullish
Trading Take-away: Short
EUR/JPY
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Technical: Next downside level to watch is 107 with 115.50 near term resistance now. A close over 116 would ease near term bearish bias. Near term support is sited at 111.40.
Retail Sentiment: Neutral
Trading Take-away: Neutral
Commodities FX: Gold stabilised around the $1320 level despite the risk on sentiment, with the bullion closing up 0.2% to $1321.90. Oil settled 3.1% lower, or $1.55, at $48.33 a barrel, with prices capped at the key resistance of $50.00 and investors cited to take profit ahead of the long weekend U.S. AUD Iron ore maintained its upward momentum, with steel prices in China driving the sector. However, physical buyers were few and far between, suggesting this latest rally is reaching its limit. CAD Back in the US, while factories conditions in Dallas and Richmond districts remained weak, conditions in Kansas City and Chicago gathered steam in June and showed diverging pace of recovery in the US manufacturing sector. Separately, jobless claims rose 10k to 268k last week, continued to underscore strength in the US labour market
AUD/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Technical: Recovery from Brexit lows stalls at the pivotal .7480 the midpoint of the broader .7660/.7300 range. While .7480 caps upside reactions expect a further attempt to breach range lows.
Retail Sentiment: Neutral
Trading Take-away: Neutral
USD/CAD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Technical: While 1.29 supports price appears to be in a bullish consolidation with risk to the upside, with bulls targeting a 1.32 test. Below 1.29 opens 1.2680 range lows.
Retail Sentiment: Bullish
Trading Take-away: Short
XAU/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish
Technical: Next level to watch on the upside is 1361 en route to a broader 1390 with 1303 near term support now. Only below 1240 concerns near term bullish bias.
Retail Sentiment: Bullish
Trading Take-away: Long
US OIL
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish
Technical: Only a close below 46 threatens medium term bullish bias, below .46 opens a test of 44 as next downside objective. As 46.70 supports expect a retest of 51.60’s highs.
Retail Sentiment: Neutral
Trading Take-away: Neutral
