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GBP/USD May Low Back in Focus as U.K. CPI Disappoints
DailyFX.com -
Talking Points:
- GBP/USD Struggles Ahead of U.K. Jobless Claims Report- May Low in Focus.
- AUD/USD Risks Larger Pullback on Slowing China Inflation.
- USDOLLAR Pushes to Fresh Weekly High- U.S. Retail Sales on Tap.
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GBP/USD
Chart - Created Using FXCM Marketscope 2.0
GBP/USD struggles to hold its ground as the U.K. Consumer Price Index (CPI) unexpectedly contracts 0.1% in September; may see the sterling face increased headwinds should Bank of England’s (BoE) Andrew Haldaneendorse a dovish outlook for monetary policy, which may spur a larger run at the May low (1.5088).
With U.K. Jobless Claims expected to contract 2.2K in September, a further improvement in the labor market accompanied by stronger wage growth may boost the appeal of sterling as it boosts the outlook for growth and inflation.
DailyFX Speculative Sentiment Index (SSI)shows retail crowd remains net-long GBP/USD since August 21, while the ratio appears to be working its way back towards recent extremes as it climbs to +2.49, with 71% of traders long.
AUD/USD
Even though China’s Trade Surplus unexpectedly widened in September, the Australian dollar lags behind its major counterparts as the report showed a 20.4% decline in imports; may see the near-term advance in AUD/USD continue to unravel as China’s Consumer Price Index (CPI) is expected to slow to an annualized 1.8% from 2.0% in August.
Need a break/close above 0.7380 (50% retracement) to 0.7390 (78.6% expansion) to favor a further advance especially as the RSI turns ahead of bought territory.
Failure to hold above 0.7220 (23.6% expansion) to 0.7240 (100% expansion) may spur a resumption of the long-term downward trend especially as the Reserve Bank of Australia (RBA) favors a weaker exchange rate.
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Read More:
Price & Time: Crude Fails At Widely Watched Moving Average Again
Webinar: USD Weakness Targets Key Support- Comm Bloc Overstretched?
USDOLLAR(Ticker: USDollar):
Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
DJ-FXCM Dollar Index | 11952.70 | 11964.79 | 11916.98 | 0.24 | 99.32% |
Chart - Created Using FXCM Marketscope 2.0
With the Dow Jones-FXCM U.S. Dollar continuing to close above the 200-Day SMA (11,919), the greenback may face a larger rebound as U.S. Retail Sales are projected to increase another 0.2% in September.
As the Fed continues to endorse a 2015 liftoff, the Beige Book may highlight an improved outlook across the 12-districts, but the statement may provide little hints on the timing of the rate-hike.
With USDOLLAR holding above 11,898 (50% retracement) to 11,901 (78.6% expansion), a close above the Fibonacci overlap around 11,951 (38.2% expansion) to 11,965 (23.6% retracement) may highlight a larger advance for the greenback.
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--- Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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