GBP/USD recovering from early risk slump

Markets are keeping one foot in safe havens as the US launches another volley of China tariffs.
With the UK calendar empty until Wednesday, Brexit is the meaningful data point for traders this week.

Joshua Gibson FXStreet

The GBP/USD is popping into 1.3160 ahead of London's market open for Tuesday after further tariffs in the US-China trade war are set to come into effect on September 24th.

Market sentiment took a step lower in Tuesday's early trading after the US announced $200 billion in tariffs against China, and broader risk sentiment has struck a cautious tone as traders brace for reactions from China.

Tuesday marks the second day in a row of little UK economic data on the calendar, and traders are looking towards Wednesday's CPI reading at 08:30 GMT, where markets are forecasting a tick lower from 1.9% to 1.8% for the y/y figure into August.

Brexit continues to be the headliner of note for the GBP markets; hardline Brexiteers within the UK's own government are promising to automatically vote down any deal that Prime Minister May reaches with the EU, just as Michel Barnier, the EU's lead Brexit negotiator, finally looks set to begin working on making a workable agreement with PM May.

GBP/USD levels to watch

The Sterling is leaning into the bullish camp, buoyed by Brexit hopes, and as FXStreet's own Valeria Bednarik noted, "the GBP/USD pair broke above its previous 6-week high but held a few pips below the 1.3170 resistance, the 50% retracement of the 2016/18 rally. The 4 hours chart shows that a bullish 20 SMA continues providing intraday dynamic support, currently at 1.3090, also that the RSI indicator lost directional strength after reaching overbought levels, and that the Momentum turns lower, rather indicating pausing buying interest than an upcoming decline, as the price remains at daily highs. Large stops are suspected above the mentioned long-term Fibonacci resistance and could result in a steeper advance if they got triggered. 1.3212, July 26th daily high, is the next possible bullish target."

Support levels: 1.3125 1.3090 1.3045

Resistance levels: 1.3170 1.3210 1.3240

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

AUD/USD extends the range play above 0.7200 as traders await US inflation data

AUD/USD is seen extending its consolidative price move above 0.7200 during the Asian session on Thursday amid mixed cues. Rising RBA rate-hike bets keep the Aussie close to its highest level since May 14. However, hawkish Fed expectations and escalating US-Iran tensions offer some support to the US Dollar, capping the currency pair as traders await US inflation figures.

USD/JPY consolidates around 153.50 as bears turn cautious ahead of US inflation

USD/JPY stabilizes above 153.50 during the Asian session on Thursday, but remains near a seven-month low set earlier this week as hawkish BoJ repricing continues to underpin the Japanese Yen. Meanwhile, rising September Fed rate-hike bets and escalating US-Iran tensions help ease US Dollar selling pressure, offering some support to the currency pair ahead of US inflation figures.

Gold remains stuck between two key averages ahead of the US inflation test

Gold is building on the previous recovery from one-week lows near $4,350 early Thursday, stretching beyond $4,400. Gold buyers now look forward to the US Producer Price Index (PPI) and Consumer Price Index (CPI) data due Thursday and Friday, respectively, for a sustained turnaround. Gold is finding continued support from the United States (US) Treasury Department’s measure to rescue the bond market.

Oil surge drives Equity rout

The traditional September selling in equities really seems to be taking hold thanks to higher oil prices, says Chris Beauchamp, Chief Market Analyst at online trading and investing platform IG. The second oil surge in a year has really begun to drag stock markets lower, as it combines with pre-CPI anxiety among investors who already regard next week’s Fed meeting with plenty of trepidation.

Jobs opened the door for the Fed — inflation decides whether it walks through

The latest US jobs report did not end the debate over the Federal Reserve’s (Fed) next move. It may have done something more subtle: it gave policymakers permission to keep their options open. After months of softer labour market signals, August delivered a stronger-than-expected rebound.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.