Talking Points:
- AUD/USD Range at Risk on Dismal China Gross Domestic Product (GDP) Report.
- GBP/USD Threatens Bearish Pattern on Hawkish Carney- U.K. Wage Growth in Focus.
- USDOLLAR Weighed by Weak Retail Sales- All Eyes on Fed Testimony.
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Chart - Created Using FXCM Marketscope 2.0
- Even though the long-term outlook for AUD/USD remains bearish, the pair may face a larger rebound as the Relative Strength Index (RSI) makes a more assertive push off of oversold territory; will watch former support around 0.7570 (50% expansion) to 0.7590 (100% expansion) for new resistance.
- Nevertheless, the aussie may face additional headwinds over the next 24-hours of trade as China – Australia’s largest trading partner – is expected to grow below an annualized 7.0% for the first time since 2009; may fuel speculation for the Reserve Bank of Australia (RBA) to further embark on its easing cycle.
- The DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long AUD/USD since May 15, with the ratio coming off of extremes as its sits at +2.40.
GBP/USD
- Despite the slowdown in the U.K. Consumer Price Index (CPI), GBP/USD is making a more meaningful assault to breakout of the downward trend from June as Bank of England (BoE) Governor Mark Carney continues to prepare U.K. households and businesses for higher borrowing-costs.
- May see a further advance in GBP/USD over the next 24-hours of trade as the U.K. Jobless Claims report is expected to show Average Hourly Earnings climbing an annualized 3.0% following the 2.7% expansion in April.
- Failure to break trendline resistance along with the lack of momentum to close above 1.5540 (50% retracement) to 1.5570 (38.2% retracement) may produce range-bound prices in the coming days.
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USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11973.60 | 12018.88 | 11944.71 | -0.25 | 130.05% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar pares the decline following the unexpected 0.3% contraction in U.S. Advance Retail Sales to preserve the upward trend carried over from the previous month as market participants still anticipate the Fed liftoff in September.
- The semi-annual Humphrey-Hawkins Testimony with Fed Chair Janet Yellen takes center stage as the mixed batch of data dampens the prospects for growth and inflation; limited risk for a material shift in the policy outlook as the central bank head sees scope for a 2015 rate hike.
- With the bullish patterns still in play, topside targets remain on the radar with 12,043 (may high) to 12,049 up first, followed by 12,162 (April high).
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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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