London Forex Report: US stocks market rose to fresh record high on Monday as volatility caused by Brexit eased and data release on Friday indicated consumers eagerness to spend and industrial output growth rose more than expected in June. Equities were also boosted by expectation of gradual tightening path this year. US data stream was thin Monday, US home builder confidence index dropped slightly in July (59 vs June: 60) as global events dampened business spending and increased doubts that economic growth will remain firm in the longer run. The USD Index was range-bound throughout and settled at 96.56, a 0.02% dip after softening in US trade
FX Majors: EUR spot-week at-the-money volatility has remained as low as around 9.4 showing that the EUR/USD pair may persist to trade sideways at its current level. Markets will turn their focus to the German ZEW Survey and the Euro-Zone ZEW Survey due today. GBP rose from around 1.3167 to above 1.3250 on Monday, boosted by expectations of inflows after Japan’s Softbank (T:9984) agreed to buy chip firm ARM (NASDAQ:ARMH) in a 24.3 billion pound deal. The pound extended gains after Bank of England policymaker Martin Weale said he was unsure if he would support an interest rate cut at next month’s meeting. Traders are worried that Britain will face a recession in coming quarters and more serious current account deficit . USD rose to a three-week high against the JPY safe-haven lost ground against the USD yesterday amid a failed Turkey coup and expectations for more easing policies out of Japan in July’s meeting. Markets are speculating that the Bank of Japan will further ease its monetary policy at the rate review on 29 July as Japanese policymakers suggested that a strong yen could hurt its fragile economy.
EUR/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Technical: Range trade persists, 1.12 resistance 1.10 support, over 1.12 sets target at symmetry swing resistance sited at 1.13, below 1.10 opens 1.09 reaction lows.
Retail Sentiment: Neutral
Trading Take-away: Neutral
GBP/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Technical: 1.3340 breach focuses upside attention on symmetry swing resistance sited at 1.3550. Below 1.3170 opens 1.30 base retest.
Retail Sentiment: Neutral
Trading Take-away: Neutral
USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Technical: While 104 acts as support 106.70 becomes the next upside objective. Only a close below pivotal 103.50 threatens near term bullish bias
Retail Sentiment: Bearish
Trading Take-away: Sidelines
EUR/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Technical: As 116.40 supports bulls target 119.30 as the next upside objective.Only below 115 threatens near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Sidelines
Commodities FX: Gold fell as European equities rose after trader jitters calmed following a failed coup attempt in Turkey. Oil prices fell on Monday as rising stockpiles of crude and refined fuel intensified fears that another major glut is building. Market intelligence firm Genscape reported that the Cushing, Oklahoma delivery hub for US crude futures saw a supply build of 26,460 barrels in the week to July 15. AUD RBA minutes offered no surprises and it suggested that the RBA expectations will depend on outcome of Q2 CPI due 27 July. CAD implied probability of a BOC rate cut this year fell below 10%, overnight index swaps data showed. It had been above 30% in the week following the British referendum vote on 23 June to leave the European Union.
AUD/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: With the breach of support at .7550. attention shifts back to .7430 as we continue to rotate in a broader .7660/.7340 range
Retail Sentiment: Neutral
Trading Take-away: Neutral
USD/CAD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Technical: 1.2850 pivotal for carving out a potentially bullish base, with higher lows targeting a push higher to 1.32. Below 1.28 opens move back to range lows 1.2650.
Retail Sentiment: Neutral
Trading Take-away: Neutral
XAU/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Technical: Bulls now target 1391 as 1320 bids continue to support. Only below 1300 concerns near term bullish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral
US OIL
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Technical: 44 acts as pivotal support while this level survives 48.30 become the upside objective. Below 44 opens 41.87 as the downside objective.
Retail Sentiment: Bullish
Trading Take-away: Sidelines
