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MARKET DEVELOPMENT – USD RECOUPS LOSSES, EUR AND GBP SLIP

USD: After the largest intra-day drop since September 20th, the US Dollar has seen a slight reprieve, while FOMC rate projections have also remained relatively stable despite the sell-off in equity markets. Eyes are on the weekly close, whereby a close below the 23.6% Fibonacci retracement at 94.55 could provide a cause of concern for USD bulls.

GBP / EUR: Both the Pound and Euro are today lower amid the slight reprieve in the USD. Eurozone data slightly encouraging with industrial production beating analyst estimates. Eyes now turn to next week with political risk on the agenda with the EU summit scheduled next week.

TRY: The Turkish Lira is notably firmer this morning as geopolitical tensions between the US and Turkey have eased slightly. This came after reports that American Pastor Brunson was convicted to a 3yr sentence, however, was released given the amount of time that had already been served.

DailyFX Economic Calendar: Friday, October 12, 2018 – North American Releases

US Dollar Eyes Key Level, GBP and EUR Dip - US Market Open

DailyFX Webinar Calendar: Friday, October 12, 2018

US Dollar Eyes Key Level, GBP and EUR Dip - US Market Open

IG Client Sentiment: GBPUSD Chart of the Day

US Dollar Eyes Key Level, GBP and EUR Dip - US Market Open

GBPUSD: Data shows 57.3% of traders are net-long with the ratio of traders long to short at 1.34 to 1. In fact, traders have remained net-long since Sep 20 when GBPUSD traded near 1.3138; price has moved 0.7% higher since then. The percentage of traders net-long is now its lowest since Sep 28 when GBPUSD traded near 1.30283. The number of traders net-long is 10.8% lower than yesterday and 9.9% lower from last week, while the number of traders net-short is 0.2% lower than yesterday and 4.0% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBPUSD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse higher despite the fact traders remain net-long.

Five Things Traders are Reading

  1. Central Bank Weekly: Despite USD Price Swings, Fed Expectations Have Remained Stableby Christopher Vecchio, CFA , Sr. Currency Strategist
  2. Bitcoin (BTC) Price Breakdown Signals Further Lossesby Nick Cawley, Market Analyst
  3. Global Equities Corrected, Will the USD Follow?by Justin McQueen, Market Analyst
  4. Charts for Next week – EUR/USD, GBP/USD, GBP/JPY, Gold Price & More” by Paul Robinson, Market Analyst
  5. EURUSD Outlook: Remains Elevated but Italian Budget Face-Off Nears” 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