Talking Points:
- GBP/USD Rebound to Benefit From Strong U.K. Core Consumer Price Index (CPI).
- USD/CAD Pushes Fresh Monthly High (1.1922) as Oil Extends Decline.
- USDOLLAR Rally Remains Supported by 10-Day SMA Post Non-Farm Payrolls (NFP).
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Chart - Created Using FXCM Marketscope 2.0
- GBP/USD may face a larger rebound as the Relative Strength Index (RSI) comes off of oversold territory; will look for a lower-high as long as the oscillator retains the bearish momentum.
- Despite expectations for a marked slowdown in the U.K. Consumer Price Index (CPI), may see a mixed reaction if the core rate of inflation exceeds market forecast.
- DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long GBP/USD since October 28, with the ratio currently standing at +1.74.
USD/CAD
- USD/CAD climbs to 1.1922 as weak oil prices continue to dampen the outlook for the Canadian economy; will continue to favor the topside targets as RSI pushes deeper into overbought territory.
- May see the Bank of Canada (BoC) reinforce a neutral tone for monetary policy at the January 21 meeting as Governor Stephen Poloz remains in no rush to raise the benchmark interest rate.
- Next topside level of interest for USD/CAD comes in around 1.1950-60 (100% expansion).
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Read More:
Price & Time: EUR/JPY Rebounds Off Key Convergence
Proliferation of EURUSD Parity Calls Indicates Sentiment Extreme
USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11646.86 | 11678.14 | 11611.31 | 0.10 | 151.16% |
Chart - Created Using FXCM Marketscope 2.0
- Despite the limited market reaction to the Non-Farm Payrolls (NFP) report, Dow Jones-FXCM U.S. Dollar continues to kiss of the 10-Day SMA (11,613); continued closes above 11,623 (100% expansion) may highlight bottoming-process.
- Beyond the data coming out of the U.S. economy, the 2015 rotation in the Federal Open Market Committee (FOMC) poses a near-term risk to the bullish USDOLLAR outlook as last year’s dissenters (Richard Fisher & Charles Plosser) lose their vote.
- As the RSI retails the long-term bullish trend, break above 11,721 (38.2% expansion) should expose 11,774 (50.0% expansion).
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| Release | GMT | Expected | Actual |
|---|---|---|---|
| Labor Market Conditions Index (DEC) | 15:00 | -- | 6.1 |
| Fed’s Dennis Lockhart Speaks on U.S. Economy | 17:40 |
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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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