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GBP Range in Focus Ahead of BoE- AUD Vulnerable to Dovish RBA

GBP Range in Focus Ahead of BoE- AUD Vulnerable to Dovish RBA

David Song, Strategist

Talking Points:

-GBP/USD Range in Focus Ahead of BoE Interest Rate Decision.

- AUD/USD Rebound Vulnerable to Dovish RBA Policy Statement.

- USDOLLAR Struggles as Personal Spending, ISM Manufacturing Disappoint.

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GBP/USD

GBP/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • GBP/USD may continue to face range-bound prices as the Bank of England (BoE) is widely expected to retain its current policy at the February 5 meeting; may see another unanimous vote.
  • BoE Inflation report due out on February 12 may have a greater impact on the British Pound as the central bank updates its growth/inflation forecast; will Governor Mark Carney continue to warn of higher borrowing-costs?
  • Even though retail crowd remains net-long GBP/USD, seeing a string of lower-highs in the DailyFX Speculative Sentiment Index (SSI) as the ratio currently stands at +1.79.

AUD/USD

AUD/USD Daily Chart
  • AUD/USD may face a larger rebound as it holds the December low (0.7718), while the Relative Strength Index (RSI) comes off of oversold territory.
  • Even though the Reserve Bank of Australia (RBA) is expected to keep the benchmark interest rate on hold at the February 2 meeting, dovish rhetoric from Governor Glenn Stevens may prompt a further decline in AUD/USD as the central bank head prefers the exchange rate closer to 0.7500.
  • Failure to hold above the December low should expose the next downside region of interest around 0.7680 (161.8% expansion).

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Read More:

Price & Time: USD/JPY Continues to Tease

EURUSD - Looking For Pre-ECB Prices In Near-Term

USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index11824.3411848.8411812.65-0.1754.79%
USDOLLARUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar paring gains as Personal Spending & ISM Manufacturing fall short of market expectations; will keep a close eye on the RSI as it struggles to hold above 70.
  • The highly anticipated Non-Farm Payrolls (NFP) report may continue to heighten the appeal of the greenback as the economy is expected to add another 232K jobs in January, while Average Hourly Earnings are projected to increase an annualized 1.9% following the 1.7% expansion in December.
  • As the RSI struggles to hold in overbought territory, will watch former resistance zones for new support, with the first region of interest coming in around 11,721 (38.2% expansion).

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ReleaseGMTExpectedActual
Personal Income (DEC)13:300.2%0.3%
Personal Spending (DEC)13:30-0.2%-0.3%
Personal Consumption Expenditure Deflator (MoM) (DEC)13:30-0.3%-0.2%
Personal Consumption Expenditure Deflator (YoY) (DEC)13:300.8%0.7%
Personal Consumption Expenditure Core (MoM) (DEC)13:300.0%0.0%
Personal Consumption Expenditure Core (YoY) (DEC)13:301.3%1.3%
Markit Purchasing Manager Index Manufacturing (JAN F)14:4553.753.9
ISM Manufacturing (JAN)15:0054.553.5
ISM Prices Paid (JAN)15:0039.535.0
Construction Spending (MoM) (DEC)15:000.7%0.4%

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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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