London Forex
Hawkish FOMC minutes released from the last meeting further heightened expectations of a possible hike in June. The removal of “global risks” from the recent Fed rhetoric was viewed by many as paving the way for a June hike and the latest minutes appear to be reaffirming this view. Policy makers said it would be appropriate to hike in June if economic data picks up in Q2 and that inflation and labour-market condition continue to firm up. “Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labour market conditions continue to strengthen and inflation making progress toward the 2% objective, then it likely would be appropriate for the Fed to increase the target range for the Fed Funds Rate in June”. Meanwhile, the Fed reiterated that the tightening path will be gradual to accommodate recovery of the economy, members will “continue to closely monitor inflation indicators and global economic and financial developments.” USD advanced, the USD Index jumped 0.56% to 95.08 after the latest FOMC minutes suggested that a rate hike in June remains a possibility, defying market expectations that have previously begun pricing out a June hike.
FX Majors
EUR Eurozone’s CPI slipped into deflation again, falling 0.2% Y0Y in April from the flat growth it registered a month ago. The lack of upside inflationary pressure amid extended weakness in energy prices and lackluster demand suggests ECB would more likely than not expand its stimulus again to spur demand for GBP. UK unemployment rate held steady at 5.1% the three months through March as concerns over EU referendum weighs on business owners decision to hire. Firms added 44k employees to payroll last quarter but significantly below the 205k jobs created in 4Q as economic activities cooled before the referendum. The number of jobless claims fell 2.4k in April after climbing 14.7k in March, bringing claimant count rate 0.1 ppt down to 2.1% but lower claims was largely overshadowed by broad-based weakness in job-market recovery this year. JPY Following better than expected Q1 GDP number, Japan’s machine tool orders staged a surprise 5.5% MoM increase in March (Feb: – 9.2% MoM). According to the Cabinet office in Tokyo, the rebound was led by demand from manufacturers
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Technical: Prior support at 1.1280 now becomes resistance while this area contains upside reactions, expect a test of 1.12 as interim support as bears now target symmetry support at 1.1065, only over 1.1450 eases immediate downside bias.
Retail Sentiment: Bullish
Trading Take-away: Sidelines
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish
Technical: The breach of 1.4550 eases immediate bearish bias. While 1.4500 contains downside reactions bulls target 1.4660 as the next upside objective, a close below 1.45 opens a move back to 1.4320
Retail Sentiment: Bearish
Trading Take-away: Long
USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Technical: As 109.50 supports intraday expect a retest of offers at 110.60/90, a close over 111.90 eases immediate bearish bias.
Retail Sentiment: Bearish
Trading Take-away: Long
EUR/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Technical: Bears now target weekly symmetry objective at 120.60. Intraday resistance at 124.65 only a close above 126.80 eases immediate downside pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral
Commodities FX: GOLD fell 1.6% to close at 1,258.50 an ounce, near session lows of 1,255.23, lowest since end April. OIL erased gains of 0.74% ($48.95 a barrel) as the dollar surged post Fed minutes to settle 12 cents lower, at $48.19 . AUD fell yesterday as a bounce from recent lows was obstructed by speculation US interest rates could rise as early as June. The pair was unable to hold gains made on Tuesday when minutes of the May meeting of the Reserve Bank of Australia (RBA) prompting the market to trim the chance of an interest rate cut. CAD settled weaker than 1.30 for the first time since early April, as oil prices also retreated in the face of the stronger USD. Economists expect a sharp slowdown in Canada’s economy after a strong start to 2016, while lengthening the timeline for oil production to return to normal levels could add downside risk to the outlook
AUD/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: .7240 support erased now becomes intraday resistance as bears target .7050 as the next downside objective. Only a close over .7400 eases immediate downside pressure.
Retail Sentiment: Bullish
Trading Take-away: Short
USD/CAD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish
Technical: While 1.2960 supports bulls target 1.3140 and 1.32 as the next upside extension targets. Only a close below 1.2760 eases immediate bullish pressure
Retail Sentiment: Bearish
Trading Take-away: Long
XAU/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Technical: 1288 is now resistance. The anticipated second leg of corrective price action is underway to test of the pivotal 1240. Price is currently sitting on trend line support at 1250.
Retail Sentiment: Neutral
Trading Take-away: Neutral
Crude Oil
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish
Technical: Oil as 46.70 supports 50.00 becomes the material upside objective, with a symmetry swing target sited at 50.51 ahead of the larger AB=CD swing objective at 51.09, only a close below 43.00 threatens bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long
