London Forex Report: Global financial markets remained in risk-on mode following Friday’s pleasant surprise in NFP. With no major data releases from the US and major advanced economies, the USD Index continued to hang on to recent gains, closing 0.28% stronger on the day at 96.57. Fed President George also capitalized on Friday’s robust job numbers by saying current interest rates are too low and that she could be prepared to hike.
FX Majors: EUR International Monetary Fund (IMF) calls for action over concerns relating to bail-in of retail investors in Italy, in statement after regular review of the country’s economy. IMF notes “very high” amounts of non-performing loans and slow judicial processes are straining bank balance sheets. Italy’s economic recovery “is likely to be prolonged and subject to risks”, with growth projected to reach 1.1 percent this year and 1.3 percent in 2017, the IMF said . GBP strengthened against the USD as UK Prime Minister David Cameron said his replacement would be installed by Wednesday night, lifting the uncertainty over the nation’s leadership following the Brexit vote. Theresa May, already a senior minister in Cameron’s government, is the sole candidate to replace him after Conservative Party Andrea Leadsom announced she was withdrawing from the contest. Japan’s core machine orders failed to turnaround, extending its decline for a 2nd straight month, falling 1.4% MOM in May, signaling businesses were not yet willing to increase capital spending amid a highly uncertain growth environment. In a separate release, PPI fell 0.1% MOM and 4.2% YOY in June as expected, proving last month’s 0.1% MOM increase as just a blip and that deflation persisted in Japan, which warrants further BOJ easing. Indeed, PM Shinzo Abe pledged his plans to increase stimulus to the tune of ¥10 trillion after the ruling party’s victory over the weekend’s election.
EUR/USD
Outlook: Short Term (1-3 Days): Bullish – 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: Bearish
Trading Take-away: Long
GBP/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Technical: Next downside objective is equality swing objective sited at 1.2720. A breach of 1.32 opens 1.3340 as next upside objective.
Retail Sentiment: Neutral
Trading Take-away: Neutral
USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Technical: Retest of reaction lows attracts anticipated buying interest. A sustained move through 103.50 is required to ease immediate downside pressure.
Retail Sentiment: Bearish
Trading Take-away: Long
EUR/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Technical: Daily symmetry and structure resistance is sited at 116.15, this becomes the corrective objective with a breach of near term resistance sited at 115. Near term support comes in at 113.80
Retail Sentiment: Bearish
Trading Take-away: Long
Commodities FX: GOLD price retreated on Monday after the better than expected US jobs report sank in. The gold price declined by US$10.93 to US$1,355.40 on Monday. Crude Oil ended lower on Monday (8 Jul) on re-emerging supply worries with prices retreating 2- month lows. Analysts are worried about Asian demand while Baker Hughes reported another increase of US oil rig counts by 10 to 351, the fifth increase in the last 6 weeks. The US Nymex WTI futures declined by US$0.65 to US$44.76. AUD: NAB published the June business confidence rising to +6 from +3. Business conditions improved as well to +12 from +10. CAD: seasonally adjusted housing starts were 218k in June, compared with a revised 186.7k unit in May. This data, however, only gave a very little support to weakening loonie. The loonie is expected to stay quiet before the BoC rate decision meeting due this Wednesday.
AUD/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Technical: Renewed emphasis on a test of upper end of the range breach of .76 opens .7648 range highs, through here sets bullish sites on .7830 next. Intraday support is sited at .7575.
Retail Sentiment: Bearish
Trading Take-away: Sidelines
USD/CAD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Technical: Expected near term breach of 1.31 resistance attracts fresh profit taking/selling, below 1.30 opens move back to test range support at 1.28.
Retail Sentiment: Neutral
Trading Take-away: Neutral
XAU/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish
Technical: Bulls now target 1391 with 1334 near term support now. Only below 1300 concerns near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long
US OIL
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Technical: Another sub 46 close threatens medium term bullish bias, below 44 opens 41.87 as the next pivotal downside objective
Retail Sentiment: Bullish
Trading Take-away: Sidelines
