London Forex Report: US released a very good headline number that showed a surprise acceleration in durable goods orders to 3.4% MoM in April driven by a surge in the volatile transport segment. Core orders indeed contracted for the 3rd consecutive month, by 0.8% MoM, reaffirming extended weakness in business spending as businesses remained uncommitted in the wake of uncertain growth prospects. On the contrary, both job and housing data added to signs of improvement in the US economy that could likely reinforce the case for a June Fed rate hike. Fed Powell commented that "another rate increase may be appropriate fairly soon" whilst suggesting that the pace of rate hike should be gradual. USD Index has softened for two straight days, closing at 95.17. Despite upbeat headline US durable goods orders, underlying trend implied extended weakness in business spending. That overshadowed another report indicating that pending home sales surged the most since Oct 2010. Traders turning to the 'wait and see' mode before Yellen's speech today.
FX Majors: EUR markets still focused on the upcoming US rate hike, expected in June or July. European leaders have stepped up secret talks about a future union without Britain, citing interviews with more than a dozen politicians and officials, including Eurogroup chief Jeroen Dijsselbloem GBP Economic growth in the UK came in at 0.4% QoQ in 1Q, supported by household spending which grew 0.7%, the fastest pace in almost a year, but this was negated by the 0.3% QoQ fall in exports. On the contrary, BBA home loans unexpectedly softened to 40104 in April. Focus will now shift towards upcoming debate over how far the June 23 referendum is damaging the economy. While uncertainty may continue to take its toll on hiring and prospective investments, Brexit supporters argue consumers are in good health, whilst a wider slowdown would be happening anyway given the subdued global growth environment. JPY Japanese PM Shinzo Abe presented to his fellow G7 leaders on Thursday, ca utioning risk of world economy falling into a crisis on the scale of 2008 Lehman shock if appropriate policy measures were not implemented. Some market particpants believe Abe's comments suggest a postponement of sales tax hike making reference to subdued growth and prospects of risks similar to Lehman crisis. Meanwhile CPI in Japan slipped further to -0.3% in April, versus survey of -0.4% and prior level of -0.1%, confirming persistent deflationary pressure in Japan.
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Technical: Bears target symmetry support at 1.1065, 1.1180 area proving sticky a sustained breach opens 1.1240 as the next resistance level only over 1.13 eases immediate downside bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish
Technical: As 1.4660 prior resistance now acts as support expect a test of 1.4770. Only a failure at 1.4530/50 support threatens near term bullish bias
Retail Sentiment: Bearish
Trading Take-away: Sidelines
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Technical: Retest of offers at 110.60/90 see sellers emerge, the subsequent failure at 109.50 has created a bullish consolidation range between 109 and 110.50 a failure below range support opens a move to retest bids back towards 107.50, a close over 111.90 eases immediate bearish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: Bears now target weekly symmetry objective at 120.60. Intraday resistance at 124.20 only a close above 126.80 eases immediate downside pressure.
Retail Sentiment: Bullish
Trading Take-away: Sidelines
Commodities FX: GOLD lost its early gains on Thursday, hovering just above the prior session's seven-week low as the US was bolstered by hawkish Fed comments. Oil prices tested the $50/bblmark as production outages brought a faster-than-expected recovery to an oversupplied market. AUD Aussie recovered some ground after a mixed capital expenditure report included a slight upgrade to overall spending plans for the year ending June 2017. CAD Canadian dollar strengthened to a one-week high against the USD as oil moved briefly above $50 a barrel. US futures traded above $50 for the first time since November before settling at $49.48 a barrel, down 8 cents. The move in oil triggered investors to cover short positions in the Canadian dollar.
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: .7240/60 support now 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
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