Talking Points:
- GBP/USD Outlook Hinges on U.K. Jobless Claims, Wage Growth Report.
- AUD/USD Former Support Zones in Focus as Pair Mounts Larger Rebound.
- USDOLLAR Threatens Bullish Momentum- Fed’s Stanley Fischer Warns of Low Inflation.
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Chart - Created Using FXCM Marketscope 2.0
- GBP/USD may continue to track sideways in the days ahead amid the ongoing closes above near-term support around 1.5450 (61.8% retracement) to 1.5460 (23.6% expansion); will keep a close eye on the key data prints amid the tightening race between the Bank of England (BoE) and the Federal Reserve to normalize monetary policy.
- Despite expectations for another 1.0K rise in U.K. Jobless Claims, sticky/strong wage growth figures may heighten the appeal of the British Pound as it puts increased pressure on the BoE to lift the benchmark interest rate off of the record-low.
- Nevertheless, the DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long GBP/USD since July 1, but the ratio remains off of recent extremes as it sits at +1.35 with 58% of traders long.
AUD/USD
- Long-term outlook for AUD/USD remains bearish amid the divergence in the policy outlook, but may see a larger rebound in the days ahead as the RSI carves a near-term upward trend.
- As the Reserve Bank of Australia (RBA) highlights an improved outlook for the labor market, a pickup in the region’s Wage Price Index may further reduce speculation for lower borrowing-costs as the central bank endorses a wait-and-see approach.
- Will watch former support zones for new resistance, with the first region of interest coming in around 0.7490 (61.8% expansion), following by 0.7570 (50% expansion) to 0.7590 (38.2% retracement).
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USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 12007.83 | 12052.34 | 12003.4 | -0.06 | 100.53% |
Chart - Created Using FXCM Marketscope 2.0
- Ongoing failed attempts to close above 12,049 (78.6% retracement) raises the risk for a larger pullback in the Dow Jones-FXCM U.S. Dollar especially as the RSI threatens the bullish momentum carried over from May.
- Even though the Fed sees the U.S. economy approaching full-employment, the disinflationary environment may become a growing concern for the central bank and spur a further delay of the normalization cycle as the renewed weakness in oil/energy prices dampens the outlook for price growth.
- As the USDOLLAR comes off of near-term resistance, the Fibonacci overlap around 11,951 (38.2% expansion) to 11,965 (23.6% retracement) remains in focus as the greenback searches for support.
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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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