Talking Points:
- GBP/USD Continues to Test Near-Term Resistance as BoE Retains Hawkish Forward-Guidance.
- NZD/USD Weighed by Falling Inflation Expectations- RBNZ Testimony in Focus.
- USDOLLAR Holds Range, Retains Bearish RSI Momentum as Yellen Fails to Surprise.
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Chart - Created Using FXCM Marketscope 2.0
- Bullish momentum in the Relative Strength Index (RSI) highlights the risk for a larger advance in GBP/USD, but need a close above 1.5460-70 for conviction/confirmation; may spur a larger run at former support around 1.5500-15.
- Even though the Bank of England (BoE) remains in no rush to normalize policy, Cable may continue to outperform against its major counterparts as Governor Mark Carney retains the hawkish forward-guidance.
- DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long GBP/USD as the ratio currently stands at +1.25.
NZD/USD
- NZD/USD under pressure as New Zealand inflation expectations slipped to a 15-year low; downside targets looking increasingly favorable as it preserves the bearish RSI momentum carried over from the previous year.
- With the Bank of New Zealand scheduled to testify in front of the Finance Select Committee, fresh batch of central bank rhetoric may put additional downside pressure on NZD/USD should Governor Graeme Wheeler fuel bets for a rate cut while retaining the verbal intervention on the kiwi.
- Failure to test the former support region around 0.7600-20 may spur a further decline, but need a break and close below 0.7430-50 for conviction/confirmation.
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USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11792.20 | 11830.6 | 11777.06 | 0.06 | 95.24% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar struggling to hold its ground even as Fed Chair Janet Yellen warns of a shift in the forward-guidance for monetary policy; was it priced-in?
- Even though Fed remains upbeat on the economy, language suggests the committee is in no rush to normalize monetary policy and will retain the current stance as long as it can amid the external risks surrounding the U.S. economy.
- Despite the bearish RSI momentum, still waiting for a break/close below 11,774 (50% expansion) or above 11,826 (61.8% expansion) for a more meaningful directional bias.
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| Release | GMT | Expected | Actual |
|---|---|---|---|
| S&P/Case-Shiller Home Price Index- 20 s.a. (MoM) (DEC) | 14:00 | 0.60% | 0.87% |
| S&P/Case-Shiller Home Price Index- 20 (YoY) (DEC) | 14:00 | 4.30% | 4.46% |
| S&P/Case-Shiller Home Price Index- 20 (DEC) | 14:00 | 172.70 | 173.02 |
| S&P/Case-Shiller Home Price Index (MoM) (DEC) | 14:00 | -- | 0.73% |
| S&P/Case-Shiller Home Price Index (YoY) (DEC) | 14:00 | -- | 4.62% |
| S&P/Case-Shiller Home Price Index n.s.a. (DEC) | 14:00 | -- | 166.82 |
| Markit Purchasing Manager Index Services (FEB P) | 14:45 | 54.5 | 57.0 |
| Markit Purchasing Manager Index Composite (FEB P) | 14:45 | -- | 56.8 |
| Fed Chair Janet Yellen Delivers Humphrey-Hawkins Testimony | 15:00 | ||
| Consumer Confidence (FEB) | 15:00 | 99.5 | 96.4 |
| Richmond Fed Manufacturing Index (FEB) | 15:00 | 6 |
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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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