Talking Points:

- USDOLLAR Fails to Breakout Despite Upbeat NFP Report; Retail Sales in Focus.

- GBP/USD RSI Pushes Deeper Into Oversold; Another 8-1 Split at the Bank of England (BoE)?

- AUD/USD Continues to Carve Bearish Pattern Ahead of Australia Employment Report..

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USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

12204.26

12223.09

12168.62

0.26

136.51%

USDOLLAR Breakout Attempt Fizzles Despite Upbeat NFP ReportUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Even though the Dow Jones-FXCM U.S. Dollar clears the November high (12,219) following the 292K expansion in Non-Farm Payrolls (NFP), another failed attempt to produce a higher closing price may continue to produce range-bound prices as U.S. wage growth disappoints.
  • With U.S. Advance Retail Sales anticipated to show a slowdown in household spending, a dismal consumption report may drag on interest rate expectations as it remains one of the leading drivers of growth and inflation.
  • Will keep a close eye on the topside targets around 12,162 (April high) to 12,176 (78.6% expansion) as the USDOLLAR appears to be coiling for a move higher but, a larger pullback may spur a move back towards near-term support around 12,049 (78.6% retracement) to 12,082 (61.8% expansion).

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USDOLLAR Breakout Attempt Fizzles Despite Upbeat NFP Report

GBP/USD

GBP/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • With GBP/USD coming up against channel support, the pair may consolidate going into the Bank of England (BoE) amid the ongoing 8-1 split within the Monetary Policy Committee (MPC) but, the pair stands at risk for a further decline especially as the Relative Strength Index (RSI) pushes deeper into oversold territory.
  • Even though the BoE continues to prepare U.K. households and businesses for higher borrowing-costs, more of the same from the central bank may further dampen the appeal of the sterling as Governor Mark Carney appears to be in no rush to normalize monetary policy.
  • DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long GBP/USD since November 19, but the ratio holds near recent extremes as it sits at +2.81 as 74% of traders are long.

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AUD/USD

AUD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite the 0.4% expansion in Australia Retail Sales, AUD/USD may continue to give back the rebound from the September low (0.6906) as the pair carves a series of lower highs and low to kick off 2016.
  • With Australia Employment anticipated to contract 10.0K in December, a marked decline in job growth may spur increased headwinds for the higher-yielding currency as it puts increased pressure on the Reserve Bank of Australia (RBA) to further embark on its easing cycle.
  • Downside targets remain in focus as the RSI flirts with oversold territory, with the 2015 low (0.6906) in focus, following by 0.6860 (61.8% expansion).

Read More:

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Trading Opportunities of 2016: Key Currency Crosses to Watch amid the Diverging Paths for Monetary Policy

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--- Written by David Song, Currency Analyst

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