Talking Points:
- GBP/USD Retail Positioning Narrows from Extreme Ahead of U.K. CPI Report.
- AUD/USD Continues to Carve Bullish Formation Ahead of China Trade Balance.
- USDOLLAR Extends Decline Even as Fed’s Fischer, Lockhart Endorse 2015 Liftoff.
For more updates, sign up for David's e-mail distribution list.
Chart - Created Using FXCM Marketscope 2.0
- Even though the headline reading for the U.K. Consumer Price Index (CPI) is expected to hold flat for the second consecutive month in September, and uptick in the core rate of inflation may spur a bullish reaction in GBP/USD as it puts increased pressure on the Bank of England (BoE) to normalize monetary policy sooner rather than later.
- Will also keep a close eye on the key speeches by BoE board member Ian McCafferty & Andrew Haldane as the central bank sees inflation holding below 1% until Spring 2016.
- DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long GBP/USD since August 21, but the ratio continues to come off of recent extremes as it narrows to +2.09, with 68% of traders long.
AUD/USD
- AUD/USD may extend the advance from the earlier this month as it continues to carve a series of higher highs & lows, while the Relative Strength Index (RSI) pushes into overbought territory.
- With China – Australia’s largest trading partner – expected to show a narrowing surplus in September, a dismal development may dampen the appeal of the higher-yielding currency amid the weakening outlook for global growth.
- A break/close above 0.7380 (50% retracement) to 0.7390 (78.6% expansion) should expose the next topside region of interest around 0.7490 (61.8% retracement) to 0.7500 (61.8% expansion).
Join DailyFX on Demand for Real-Time SSI Updates Across the Majors!
Read More:
More Chinese Stimulus Prods Markets Higher
Price & Time: Another Big Support Test For USD/CAD
USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11918.36 | 11943.13 | 11913.55 | -0.19 | 59.23% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar extends the decline from the previous week even as Fed Vice-Chair Stanley Fischer and Atlanta Fed President Dennis Lockhart continue to endorse a 2015 rate hike; will continue to watch the downside targets amid the bearish formation that continues to take shape.
- Even though the Fed stands ready to normalize monetary policy later this year, the ‘data dependent’ central bank may look to buy more time as the outlook for growth and inflation remains tilted to the downside; Advance Retail Sales & the Consumer Price Index (CPI) may heavily impact the Fed outlook ahead of the October 28 interest rate decision amid the mixed data prints coming out of the U.S. economy.
- Will keep a close eye around 11,898 (50% retracement) to 11,901 (78.6% expansion) amid the ongoing string of lower highs & lows.
Join DailyFX on Demand for Real-Time SSI Updates!
--- Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
To be added to David's e-mail distribution list, please follow this link.
Trade Alongsidethe DailyFX Team on DailyFX on Demand
Looking to use the DailyFX Trade Signals LIVE? Check out Mirror Trader.
New to FX? Watch this Video
Join us to discuss the outlook for the major currencies on the DailyFXForums
