GBP/USD: Time for long position

ECONOMIC CALENDAR

EUR/USD: US Q2 GDP revised up

• The U.S. economy rebounded more strongly than initially estimated in the second quarter. GDP expanded at a 4.2% annual rate instead of the previously reported 4.0%, reflecting upward revisions to business spending and exports. Domestic demand increased at a 3.1%, instead of the previously reported 2.8%. Growth in consumer spending was unrevised at a 2.5% rate. The relatively smaller inventory build means less stock overhang, which bodes well for third-quarter GDP growth.

• Initial claims for state unemployment benefits fell for a second straight week to a seasonally adjusted 298k for the week ended August 23 vs. expectations of a rise to 300k.

• The USD appreciated against major currencies after the release. The EUR/USD was traded above 1.3200 before the reading but then fell near 1.3170. We stay flat on the EUR/USD and see a possibility of recovery in the short term. Our medium-term outlook is still bearish.

Significant technical analysis' levels:

Resistance: 1.3222 (hourly high Aug 28), 1.3297 (high Aug 22), 1.3324 (high Aug 20)

Support: 1.3105 (low Sep 6), 1.3089 (low Jul 19), 1.3051 (low Jul 16)

USD/JPY: Rising risk aversion poses a threat to our long position

• Ukrainian President Poroshenko said on Thursday Russian forces had been brought into Ukraine. He called an urgent meeting of Ukraine's security and defence council to decide the next steps to take in the crisis. 

• Rising risk aversion was the main reason for appreciation of safe-haven assets, including JPY. The USD/JPY fell as low as 103.56, however significant buy orders are noted in the area 103.50/60 and the rate did not manage to break below the support level. The next key support level is situated at 103.35 (38.2% of 101.51-104.49). We are ahead of important macroeconomic releases in Japan. Some weaker readings are likely to push the USD/JPY up. We maintain our long position. The main risk comes from uncertain geopolitical situation.

Significant technical analysis' levels:

Resistance: 104.16 (high Aug 27), 104.49 (high Aug 25), 104.84 (high Jan 23)

Support: 103.50 (low Aug 22), 103.35 (38.2% of 101.51-104.49), 103.15 (high Jul 30)

AUD/USD higher after better CAPEX data

• Sales of new homes in Australia slipped by 5.7% mom in July but still remained at a historically high level. The Housing Industry Association said its survey of large builders showed sales of private sector new houses fell 4.7% mom while multi-unit sales went down by 10.9% mom after jumping in June. 

• Australian business investment beat expectations last quarter with an increase of 1.1% qoq (seasonally adjusted) vs. expected decline by 0.3% qoq. The Australian Bureau of Statistics' latest survey of planned spending for 2014/15 came in at AUD 145.2 bn, topping estimates of around AUD 142 bn. 

• The AUD/USD rose after the data to 0.9373 taking out the stops above 0.9355 and breaking above important resistance levels (50-dma at 0.9359) and then fell slightly. The strong resistance level is now in the area of 0.9375/80, breaking above which would be a clear bullish signal. 

• At GrowthAces.com we maintain our long position on the AUD/USD with the target of 0.9470.

Significant technical analysis' levels:

Resistance: 0.9373 (session high Aug 28), 0.9388 (high Jul 30), 0.9416 (high Jul 29)

Support: 0.9300 (low Aug 27), 0.9272 (low Aug 26), 0.9235 (low Aug 21)

GBP/USD: Time for long position

• We saw a turnaround from 1.6537 lows tested yesterday. The GBP/USD broke above the previous top and was traded near 1.6600. The picture is looking more positive for the GBP bulls now. We went long on the USD/GBP at 1.6575 with the target of 1.6690 (200-dma). Our stop-loss is at 1.6530.

Significant technical analysis' levels:

Resistance: 1.6615 (hourly high Aug 28), 1.6680 (high Aug 20), 1.6690 (200-dma)

Support: 1.6568 (hourly low Aug 28), 1.6537 (low Aug 27), 1.6501 (low Aug 25)