Matt Simpson, CFTe, MSTA
CityIndex
ASIA ROUNDUP:
It was certainly a game of two halves for AUD today following contrasting data to see a spike to 0.945 before a prompt reversal (and some more...)
Japan May core machine orders fall sharply; Down -14.3% y/y and -19.5% m/m, which was expected to be +0.9%.
AUD inflation expectations was down slightly to 3.8% from 4% last month. However markets were awaiting the employment figures which came in mixed.
AUD June Employment +15.9k (+12k expected) however FT employment was down 3.8k, whilst PT Employment was up +19.7k; Unemployment was also up to 6%, its highest in 3-months. AUDUSD spiked to 0.945 but quickly reversed as the markets absorbed the numbers.
Chinese Trade Balance fell short today to see AUDUSD wide off the day's gains and continue down below 0.940.
UP NEXT:
BoE Bank rate is widely expected to remain fixed at 0.5% and with another unanimous vote; what would be particularly bullish for GBP is if we saw some voting members become more hawkish, or a more specific timing clue for interest rate rises occur during the following rate statement. Conversely, if the statement comes across as surprisingly dovish then we can expect some bearish movements on GBP pairs as longs unwind their position. However before you become too bearish just remember that overall the trends remain up so, so GBP pairs favour 'buy the dip' strategies.
US Initial Jobless claims are expected to remain steady. Overall job data has been very positive for the US, so any weakness here should come as more of a surprise. However any significantly good employment could help AUDUSD remain around 0.945, EURUSD below 1.3650 and Cable below 1.718 high.
CAD New House Price Index is forecast to rise by 0.1% and considered a leading indicator of the housing industry. With USDCAD seemingly building a base above 1.062, any weakness here could help provide further support for USDCAD.
TECHNICAL ANALYSIS:
GBPUSD: Holds steady ahead of BoE rate statement
The setups itself is fairly straight forward; however it would require certain conditions being met before attempting it. First of all we need to see a basing pattern around the daily pivot, but due to BoE statement and US employment data tonight we could just witness a horrid spike around key levels which don’t provide traditional entry signals.
So ideally we will see GBPUSD drift towards the daily pivot and form this base before take-off.
In the event we do see a rate rise then expects some fireworks and for Cable to break to new highs.
If we break below the daily pivot we enter what I call 'no man’s land' as this is within a congestions area and sandwiched between key levels. Only a break below 1.711 would get my interest for bearish setups.
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