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GBPUSD - Time for another move higher?Price has been falling since late September from the high at 1.3658 to the recent low around 1.3257 area. Based on our analysis, this recent fall seems to be a corrective down move, potentially a 4th wave of a 5-wave structure. With price finding some minor support between 1.3162 to 1.3257 (a fibonacci confluence between the 61.8 and 50 level), we are now looking for the opportunity to take a long trade for the 5th wave up to complete the overall cycle.
Long
by KarYong
Mkt Digest July 3: The end of bad days for Dollar may be elusiveHey guys, Its' been raining all the day so put your likes on this to save me from melancholy ;) So today we got a manufacturing PMI in the euro area signaling a rise to the highest since 2011, as European factories increase the demand for labor to absorb the growing number of orders. The index of purchasing managers from IHS Markit rose to 57.4 points in June against 57.0 in May, with the economic recovery affecting almost all regions, from Germany to stagnating Greece. And in the latter, positive dynamics are observed for the first time since August of last year, convincingly proving the region-wide character of economic expansion. A positive report is a brick in the foundation on which investors base their long positions on the euro. After fairly bullish comments by the ECB President Mario Draghi at the ECB's forum last week, the consumer price inflation figures which outstripped estimates allowed for euro upsurge. The growing demand for labor continues to drive unemployment into a corner that has fallen to an 8-year low. And the growth in sales of retailers in Germany reached 4.8% in May compared to the same period last year. The FOREX market draws a rather deceptive picture of the euro. The common currency declined against its main opponent, the US dollar, by half a percent on Monday, thanks to the comments of Fed Chairman Yellen predicting no crisis for the US near future. Now EURUSD will see a "fight of bullish sentiments," but given the two increases this year and the difficulties in the domestic political arena, the Fed mood may deteriorate much more likely than the ECB. Comparing the "stability" of rhetoric in both Central Banks, we tend to believe that the European economy has a little more potential for exploits, allowing the ECB's optimism to be more resilient.  Now regarding the greenback. On Friday, we saw a stable Core PCE at 1.4%, with a forecast of 1.4%. Household income accelerated growth, while real spending slowed, indicating a slight slowdown in consumption. However, such a conclusion was leveled with the confidence index from the University of Michigan, which turned out to be slightly higher than the forecasts. With the current rhetoric of the Fed, the absence of negative deviations from the forecasts will be enough to expect a third rate hike this year. Data helped the dollar to rebound, but from a technical point of view, the correction from a 9-month low seems logical. And the dollar almost equally grew against the major currencies of opponents, which further indicates this movement as the closure of profitable shorts. The celebration of the Independence Day in the US may also have its market effect, with the early closing of trading. The yield of US and European bonds suspended growth, after an impressive selloff of bonds last week. Oil prices are stable after last week's growth, as the reduced number of drilling rigs in the US did not allow the negative to penetrate the market, OPEC continues to look for ways-exits how to curb the output of countries outside the agreement, such as Libya and Nigeria.
Long
by PipVision
1
UK manufacturing PMI preview: What to expect of GBP/USD?UK manufacturing PMI for August is due for release today is expected to show the pace of contraction in the activity moderated somewhat. The index is seen coming-in at 49.00 compared to July’s 48.2 figure. No signs of post Brexit gloom and doom So far we have not seen any sign of post Brexit gloom and doom. It was just the July manufacturing PMI figure that triggered that matched the fear mongering spread by Anti Brexiteers. A positive manufacturing PMI figure; above 50.00; would put to rest whatever little speculation of post Brexit gloom and doom exists out there. Hence, we could see the bird revisit 1.32+ levels. The initial spike could take the pair even higher, although what matters is if the spot manages to hold above 1.32 levels on larger time frame charts. On the other hand, a weaker-than-expected figure could yield a fresh slide to 1.3065 (previous day’s low). Moreover, a weak figure ahead of payrolls release and after hawkish Yellen would only underscore the growing monetary policy divergence between the Fed and the BOE. Technicals – Stuck at 50-DMA Pair’s failure to take out symmetrical triangle resistance on last Friday followed by a drop to 1.3059 and a recovery above 1.31 if followed by a failure at 50-DMA and a break below 1.3059 levels would open doors for a revisit to 1.29-1.2865 levels. On the higher side, a convincing day end close above 1.3315 (23.6% of 1.5019-1.2789) would suggest trend reversal.
by TipTVFinance
GBPUSD SHORT: BOE/ FOMC POLICY EXPECTATIONS INCREASINGLY BEARISHFollowing today's Service/ Manufacturing PMI miss (worst contraction in 88 months - since 2009) the Sterling market has come under significant pressure as BOE rate cut expectations increase with OIS rates markets pricing a 94% chance of a 4th Aug cut vs 85% before the PMI's were released. Further, the PMI misses has attracted attention from UK Politicians e.g. Chancellor Hammond - which puts further qualitative pressure on the BOE to cut, rather than just quantitative data prints - Political pressure combined with data pressure is the best us GBP sellers can ask for when looking for a BOE rate cut. I have to say this is a breath of fresh air for GBPUSD shorts that i am holding (cable trades down to 1.30xx) - given that the start of the week was the complete opposite, with strong CPI/ Employment and Hawkish comments from MPC members Weale and Forbes; all of which reducing the pressure on the BOE to cut and thus the sterling market. Below also, following the PMIs we see Aug 4th BOE expectations from BoAML/ JPM - which call for a 25bps cut and 50bn addition to QE (with increased near-term pressure to do so/ act post-PMI) - in which imo will send GBP$ to 1.25, if not through - these expectations are encouraging for shorts thougb it should be remembered the cut was expected in July also but didnt materialise (though the minutes from the meeting did state "most members expect to ease in August". Further we see fresh recession concerns emerge as from Barclays below - once again putting downside pressure on GBP through poor GDP and increased BOE cut likihoods. Further, on the USD side of the trade, in this risk recovery we continue to view FOMC rate hike expectations rising - aiding dollar topside (and gbp$ downside) - as Fed Funds Futures Opt Implied probs now trade at 19.5% for Sept, 20.8% Nov and 40% for Dec, up from yesterday at 18.8, 20 an 39.8 - the risk-on bias already started today will likely see these probabilities continue to strengthen through the end of the day. Trading Strategy: 1. So from here after holding shorts at 1.3400 average, given this fresh and extreme impetus for downside - I will continue to hold my cable lower to the 1.285 target (unload 50%) and save 25-50% (depending if i unload 25% at the 1.305 level) for the Aug meeting itself where 1.25 is likely - where before today holding cable seemed more risky as the risks looked skewed to a hawkish BOE, which now has flipped. Unlikely, but any rallies to 1.33-35 level i will be reshorting - cable downside is a function of time imo. - I like holding short because BOJ are likely to ease, whilst the FOMC stay neutral/ Hawkish, this in turn puts more pressure on the BOE to ease/ GBP - in order to prevent GBP appreciating vs JPY (disinflationairy) BOE must ease too & hawkish FED stance puts pressure on GBPUSD lower. - Risks to the view continue to be if 1) New/ Weale/ Forbes continue to reiterate their hawkish/ no easing stance and perhaps less impactful; 2) Next weeks UK GDP reading - will not contain much Post brexit data so any upside is unlikely to give GBP strength, though downside is welcomed and could cause further selling (Low pre-Brexit GDP gives BOE more reason to cut) GBP OIS PRICING A 94% CHANCE OF A 25BPS CUT FROM THE BOE IN AUGUST (85% PRE PMI) - UK CHANCELLOR HAMMOND: Must restore uncertainty after July PMI - UK CHANCELLOR HAMMOND: BOE will use monetary policy tools at its disposal - UK CHANCELLOR HAMMOND: BOE have tools to respond to market turbulence in the short-term BoAML ON BOE: - We look for the BoE to cut rates 25bp and increase QE by £50bn in August, split between Gilts and private sector assets. - BoE inaction so far and heightened policy uncertainty leaves risk-reward unattractive in the front end in our view. - We prefer to position for potential BoE Gilt purchases, reiterating our 5s20s Gilt flattener as attractive in a QE-scenario. JP MORGAN ON BOE: - Current market pricing of a 25bps rate
Short
by QuantumLogicTrading
2
GBP/USD Construction PMI ForecastUK Construction is not the nations strongest sector and a poor or below expected read is the most likely outcome, 4 of the last 5 reads have been below average. The likely outcome will be price continuing to head down and challenging a break of the historic consolidation zone around the 38.2% fib level. A good read will confirm trader sentiment last Friday which was towards price moving up away from 38.2% zone with scope to push 50% off the back of a news catalyst like the PMI read tomorrow. Both the up and downside are on the cards so trade post result as not to gamble.
by Elliot_Myers
India Could Be the Most Resilient of the BRICSThe BRICS (Brazil, Russia, India, China and South Africa) are highly watched emerging markets because they represented roughly 22 percent of global GDP in 2014. However, the global economic slowdown and increased geopolitical tension has weighed heavy on these markets. Although, India may be the most resilient economy out of the BRICS. India has felt its share of the slower economic climate, as the Markit manufacturing PMI fell to a seven-month low in September, falling to 51.2 from 52.3. According to Markit, there are signs of sustainable growth but input costs decreased for two months consecutively, which has not happen since the financial crisis. Both manufacturing and industrial output have remained stable. Services PMI has seen improvement since late 2014. In relation, the Chinese manufacturing PMI clocked in at 47.2 and has been contracting since March while near the worst levels since March 2009. Due to the slack in the economy and less than expected inflation, the Reserve Bank of India cut the benchmark rate by 50 bps to 6.75 percent. This strengthened the rupee has investors look for it to hinder capital outflow. It also comes as the People's Bank of China (PBoC) devalues the yuan. USDINR is likely to fall further as I expect the dollar to remain weak following the onslaught of poor economic data. Friday's non-farm payroll print of 146,000 was well below the 201,000 general consensus. To add insult to injury, August's jobs number was revised lower by 50,000 which left mouthpiece economists in bewilderment. The Fed's inability to act, in regards to an interest rate boost, will leave the dollar on shaky ground. Fed fund futures traders are not pricing in a potential for Fed action until June/July of 2016 - although, I am forecasting a recession by then. The USDINR is trending within a descending channel with support at 65.28, but the pair will travel to the 50 percent Fib. retracement at 65.15 (with the 72-daily EMA as further support). Secondary target is 64.83. Resistance can be found at 65.6060, 65.8337 and 66.1374 Please follow me on Twitter @Lemieux_26 Check my posts out at: bullion.directory www.investing.com www.teachingcurrencytrading.com oilpro.com
by CommoditiesTrader