Talking Points:
- GBP/USD Struggles Ahead of U.K. Jobless Claims Report- May Low in Focus.
- AUD/USD Risks Larger Pullback on Slowing China Inflation.
- USDOLLAR Pushes to Fresh Weekly High- U.S. Retail Sales on Tap.
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Chart - Created Using FXCM Marketscope 2.0
- GBP/USD struggles to hold its ground as the U.K. Consumer Price Index (CPI) unexpectedly contracts 0.1% in September; may see the sterling face increased headwinds should Bank of England’s (BoE) Andrew Haldaneendorse a dovish outlook for monetary policy, which may spur a larger run at the May low (1.5088).
- With U.K. Jobless Claims expected to contract 2.2K in September, a further improvement in the labor market accompanied by stronger wage growth may boost the appeal of sterling as it boosts the outlook for growth and inflation.
- DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long GBP/USD since August 21, while the ratio appears to be working its way back towards recent extremes as it climbs to +2.49, with 71% of traders long.
AUD/USD
- Even though China’s Trade Surplus unexpectedly widened in September, the Australian dollar lags behind its major counterparts as the report showed a 20.4% decline in imports; may see the near-term advance in AUD/USD continue to unravel as China’s Consumer Price Index (CPI) is expected to slow to an annualized 1.8% from 2.0% in August.
- Need a break/close above 0.7380 (50% retracement) to 0.7390 (78.6% expansion) to favor a further advance especially as the RSI turns ahead of bought territory.
- Failure to hold above 0.7220 (23.6% expansion) to 0.7240 (100% expansion) may spur a resumption of the long-term downward trend especially as the Reserve Bank of Australia (RBA) favors a weaker exchange rate.
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USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11952.70 | 11964.79 | 11916.98 | 0.24 | 99.32% |
Chart - Created Using FXCM Marketscope 2.0
- With the Dow Jones-FXCM U.S. Dollar continuing to close above the 200-Day SMA (11,919), the greenback may face a larger rebound as U.S. Retail Sales are projected to increase another 0.2% in September.
- As the Fed continues to endorse a 2015 liftoff, the Beige Book may highlight an improved outlook across the 12-districts, but the statement may provide little hints on the timing of the rate-hike.
- With USDOLLAR holding above 11,898 (50% retracement) to 11,901 (78.6% expansion), a close above the Fibonacci overlap around 11,951 (38.2% expansion) to 11,965 (23.6% retracement) may highlight a larger advance for the greenback.
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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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