New York Forex Report: After a quiet start to the week yesterday traders turn their attention to upcoming US data over today’s North Atlantic session with Consumer Confidence, Services & Composite PMIs and New Home Sales all slated for release. This data comes ahead of the FOMC July meeting tomorrow where the Fed are widely expected to keep policy on hold and give a muted statement in the wake of Brexit.
FX Majors: EUR dropped to 1.0950 against the USD on Monday, the lowest since 24 June as the USD continued to strengthen amid the market expectations of Fed rate hike. However, EUR/USD erased the previous losses at European session due to the strong German July IFO Business Climate. European bank stress tests on Friday will be a focus as investors concerned about potential capital shortfalls at Italian and Portuguese banks GBP After largely disappointing manufacturing and services PMI numbers, the latest report from Confederation of British Industry pointed to darkening outlook in the manufacturing sector. The gauge of orders for factory goods slumped to -4 in July (June: -2) and a quarterly index of sentiment plunged to -47 in July (April: -5) which was the lowest since early 2009. JPY According to Japan’s July monthly economic report, the economy is on a moderate recovery path with flat private consumption and sluggish consumer confidence. Reflecting generally subdued growth environment in the second quarter, final prints of both leading (May: 99.7 vs April: 100.0) and coincident index (May: 109.9 vs April: 112.0) suggested that domestic demand may remain weak this quarter.
EUR/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Technical: Bears look to challenge 1.09 post Brexit reaction lows. Intraday resistance is sited at 1.10, while 1.1060 caps expect further downside.
Retail Sentiment: Bearish
Trading Take-away: Sidelines
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: .3260 represents symmetry resistance while this area caps expect a retest of 1.30 base, with an equidistant swing objective sited at 1.2875. Over 1.3330 shifts attention back to 1.3550 symmetry swing objective
Retail Sentiment: Neutral
Trading Take-away: Neutral
USD/JPY
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Technical: Only a close below pivotal 105.50 threatens near term bullish bias. While this area survives on a closing basis expect another test of 107.50 offers. Below 104.09 symmetry swing support opens 103.50 as the next downside objective
Retail Sentiment: Bullish
Trading Take-away: Sidelines
EUR/JPY
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Technical: Testing symmetry swing support sited at 114.49 as this area support expect retest and breach of cycle highs, below 113.50 opens 110.80 as the next downside objective.
Retail Sentiment: Bullish
Trading Take-away: Sidelines
Commodities FX: Gold was down for a second day, by 0.5% to $1,315.60 an ounce ahead of the FOMC and BOJ meeting together with the European bank stress test results later in the week. The bullion is likely to be supported near the $1,310 mark. Oil closed lower by 2.4% to $43.13 a barrel and briefly touched below $43 intraday last seen only on 26 April, weighed by returning concerns of a supply glut in crude and refined products. AUD sidelines ahead of inflation figures which could reinforce the occasion for another rate cut as early as next month. Underlying inflation is expected to dip to a fresh trough of 1.4% expected by markets while the figures due tomorrow. The market is pricing in around a 64% chance of a rate cut in August, proposing the biggest move would come if inflation surprised on the high side. CAD hit its weakest level against the USD since March, distressed by a slide in oil prices and the prospect that interest rates will rise faster in the United States than Canada.
AUD/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Technical: .7430 supports, as we continue to rotate in a broader .7660/.7340 range, with .7330 representing symmetry swing support. Intraday resistance is sited at .7550
Retail Sentiment: Neutral
Trading Take-away: Neutral
USD/CAD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Technical: 1.32 upside objective achieved, as 1.3140 supports bulls target an equidistant swing objective at 1.3381.
Retail Sentiment: Bearish
Trading Take-away: Sidelines
XAU/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Technical: Testing symmetry swing support sited at 1305, while this area attracts buyers will set a potential platform to challenge and breach 1360 highs en-route to 1391. Below 1300 opens 1270 as next downside objective.
Retail Sentiment: Bullish
Trading Take-away: Sidelines
US OIL
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: Break below 44 opens 41.87 as the downside objective, expect 44.50 prior support to act as reisitance, aclose over 47.80 required to ease bearish pressure.
Retail Sentiment: Bullish
Trading Take-away: Short
