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GBP/USD Vulnerable to Unanimous BoE- USD/CAD Carves Bullish Formation

GBP/USD Vulnerable to Unanimous BoE- USD/CAD Carves Bullish Formation

David Song, Strategist

Talking Points:

- GBP/USD Outlook Hinges on BoE Vote Count, Inflation Report.

- USD/CAD Falls Back From Fresh 2015 High on Narrowing Canada Trade Deficit.

- USDOLLAR Under Pressure as ADP Employment, ISM-Non Manufacturing Disappoint.

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GBP/USD

GBP/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • GBP/USD looks poised to retain the tight range going into the Bank of England (BoE) interest rate decision as the central bank is scheduled to release the policy statement, vote count along with the quarterly inflation report, with the fresh updates likely to heavily impact the near-term outlook for the pair.
  • Seeing heavy speculation for a dissent within the Monetary Policy Committee (MPC) as Governor Mark Carney continues to prepare U.K. households and businesses for higher borrowing-costs, but another unanimous vote may undermine the bullish sentiment surrounding the sterling as it drags on rate expectations.
  • Nevertheless, the DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long GBP/USD since July 1, but we’re seeing the ratio narrow to +1.04 ahead of the BoE as 51% of traders are now long.

USD/CAD

USD/CAD Daily Chart
  • USD/CAD pulls back from a fresh 2015 high (1.3212) as Canada Trade Balance report showed a smaller-than-expected deficit in June, but the pair remains at risk of facing a further advance in the days ahead as it continues to carve a series of higher highs & lows, while the RSI pushes back into overbought territory.
  • Even though Canada’s Employment report expected to show a 5.0K rebound in job growth, the ongoing mixed batch of data coming out of the region may continue to dampen the appeal of the loonie as the Bank of Canada (BoC) retains a dovish outlook for monetary policy.
  • Following the test of 1.3210 (78.6% expansion), a break/close above the near-term region will bring up the next topside target around 1.3280 (78.6% expansion).

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Read More:

Price & Time: USDOLLAR Stalls At Familiar Hurdle

US Dollar Holds Critical Support - Where to Next?

USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index12045.2312052.5712001.190.1099.96%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Looks as though the Dow Jones-FXCM U.S. Dollar will largely retain the range-bound price action ahead of the highly anticipated Non-Farm Payrolls (NFP) report amid the ongoing failed attempts to close above 12,049 (78.6% retracement).
  • Despite the better-than-expected ISM Non-Manufacturing survey, the mixed batch of data may spur a further delay of the Fed’s normalization cycle as Chair Janet Yellen looks for a further improvement in the real economy.
  • With the greenback holding resistance, we will keep a close eye on the Fibonacci overlap around 11,951 (38.2% expansion) to 11,965 (23.6% retracement) for near-term 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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