US Dollar Price Action vs GBP/USD, AUD/USD
A late drive lower across risk markets on Friday, saw the S&P 500 close lower for a 5th consecutive session, capping off the worst weekly performance since June. That said, equities a modestly firmer as we begin the session, which in turn sees the early dollar outperformance begin to dissipate during the European session. Looking at momentum across G10 currencies (Figure 1), trends are relatively neutral and remain some way from being considered stretched. As such, this leaves little opportunities for any countertrend plays.
Source: Refinitiv, DailyFX
GBP/USD Holds 1.38, UK Data Sensitivity Rises After Rate Talk
GBP/USD: Downside in the Pound curbed by support at the 1.3800 handle. However, rallies remain capped at 1.3880-1.3900. Also important to keep an eye on EUR/GBP, which continues to hold 0.8520. A big week for UK data, with a particular focus on the labour market report as we draw closer to the expiration of the furlough scheme. Alongside this, after Bailey stated last week that the committee had been split on the conditions for a rate hike being met, market sensitivity to UK data has likely increased.
GBP/USD Chart: Daily Time Frame
AUD/USD Drops into Support
AUD/USD: As I mentioned last week, I am bearish on rallies in AUD/USD. The psychological 0.7400 level is a stumbling block with further resistance above sitting at 0.7450. The pair has once again been held up at 0.7440 and with risk sentiment firmer, the AUD may see some reprieve. For now, the direction of travel will largely stem from risk appetite. Although, the persistent decline in iron ore prices does paint a concerning outlook for the Aussie.
AUD/USD Chart: Daily Time Frame
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