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MARKET DEVELOPMENT – AUD UNDERPERFORMS, GBP REVERSES GAINS
GBP: Initially finding support this morning following a relatively strong labour market report, in which the wage components both printed above expectations. This was largely to the impact of the 3% pay rise for NHS workers whose workforce is roughly 1.9mln. In turn, GBPUSD pushed towards the high 1.30s, however, Brexit continues to dictate price action for the Pound and reports suggesting a large amount of optimism on deal prospects due to reading too much into the recent rhetoric from the EU has led to a pullback in GBPUSD, dipping back below 1.30.
USD: The greenback edging higher with markets remaining cautious over the trade war tensions between the US and China. The latest reports from China suggest that they will ask the WTO next to place trade sanctions on the US. Alongside this, an uptick in US yields has also provided a lift in the Dollar.
AUD: The ongoing trade war dispute between the US and China continue to weigh on the Australian Dollar with sellers in full control. Reports this morning noted that China will ask the WTO for permission to impose sanctions on the US. That said, with both nations showing no signs of backing down from the trade dispute as the Trump administrations plans to impose tariffs on $200bln worth of Chinese and an additional $267bln, while China promises to retaliate. The outlook for the Australian Dollar looks to remain soft in the short term.
DailyFX Economic Calendar: Tuesday, September 11, 2018 – North American Releases
DailyFX Webinar Calendar: Tuesday, September 11, 2018
IG Client Sentiment Index: AUDUSD Chart of the Day
AUDUSD: Data shows 73.2% of traders are net-long with the ratio of traders long to short at 2.73 to 1. In fact, traders have remained net-long since Jun 05 when AUDUSD traded near 0.75867; price has moved 6.4% lower since then. The number of traders net-long is 0.9% higher than yesterday and 1.0% higher from last week, while the number of traders net-short is 12.6% higher than yesterday and 9.0% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUDUSD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed AUDUSD trading bias.
Four Things Traders are Reading
- “AUDUSD Breach of Crucial Support to Pave Way for 2016 Lows” by Justin McQueen, Market Analyst
- “Hopes Of a Brexit Deal Lift GBP Sentiment | Webinar" by Martin Essex, MSTA, Analyst and Editor
- “Technical Outlook for Gold Price, Crude Oil, DAX, Nasdaq 100 & More” by Paul Robinson, Market Analyst
- “ZEW Index Falls By Less Than Expected, DAX Still Weakens” by Martin Essex, MSTA, Analyst and Editor
- “Gold Price Analysis: Precious Metal Struggles, Breakout Looms” by Nick Cawley, Market Analyst
--- Written by Justin McQueen, Market Analyst
To contact Justin, email him at Justin.mcqueen@ig.com Follow Justin on Twitter @JMcQueenFX
