UK retail sales have given GBP a real boost higher & it's occupying six top spots on the currency matrix. Number was a great improvement & market has temporarily forgotten the negative CPI number.
What's interesting is at 8.00 am at the London open, there was a huge buy of cable off an important order board level at 1.5520 with retail sales then just adding the momentum.
Cable is also benefiting from USD pull back from its recent bullish move higher. The 4hr currency strength indicator is particularly revealing as the USD has been overbought for some time, but is now moving lower. The move higher in the London session has now moved to test the VPOC level in the daily chart, and we are now waiting to see if this afternoon's US data can help to push the GBP/USD through this key level. This is denoted on the chart with the yellow line.
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Without wishing to downgrade this evening's FOMC minutes, which will no doubt result in the usual volatile market moves, stop hunting & general shenanigans, the main FED event takes places on Friday at 6.00 pm London time. This is when Janet Yellen is due to give an important speech about the US economic outlook, and so one to watch.
Meantime USD strength has continued overnight across the majors and into this morning, with German PPI helping to give the eurodollar a shove lower. Other items of note this morning include the MPC (Monetary Policy Committee) of the BOE playing their standard formation (football parlance) of 0-0-9. In other words 9 defenders, no midfield & no strikers.
For FED watchers FOMC Member Evans has been speaking in Munich and has been simply repeating his call for a delay in raising interest rates. No moves expected as he is re-iterating his well known stance as a dove. This is why we need to know where...
USD buying has continued into US session, and despite it being a holiday in Canada the USD/CAD has done really well. Question now is how far is USD likely to move higher. The key level is 11,750 on the USDX index which is the support platform which was breached last week & of which we may see a re-test.
Focus overnight is back to AUD & NZD, with a monetary policy statement from the RBA for the first, & inflation expectation for the second. Both AUD/USD and NZD/USD have had a bearish day, although Aussie dollar less so. In addition, whilst we can expect a reaction in both these pairs, we can also expect some interesting moves in the AUD/NZD cross which today has had an 80 pip move to the upside.
Since last Tuesday the pair has traded in a relatively narrow range, 1.0865 to the top & 1.0776 to the bottom, and I do believe the overnight news may be...
Despite it being a holiday across most of Europe for Ascension Day - it's quite lively out there at the moment. We've also just had an unscheduled comments from Mark Carney (not shown on Forex Factory), but came up on Forex Live feed. Greek Fin Min Varoufakis also speaking & even mentioning the word 'reform'.
Meanwhile on the charts it's been more selling of USD which is propelling euro & gbp higher with volatility candles on faster time frames. For cable 1.5788 is a key level being tested up to and including the daily chart. Have reading how a lot of traders are looking to short cable since it went over 1.5550, but it's just not co-operating & the principle reason is the USD which continues to be sold off.
It's only in the EUR/GBP that we have seen some serious GBP selling.
This is an aspect of forex trading David & I will be covering in tomorrow's forex webinars - the importance...
It was an interesting week for the British pound and in particular against the US dollar, with the pair selling off sharply on Friday and closing with a wide spread down candle on the daily chart. The move lower was in stark contrast to the recent trend for Cable which had been firmly bullish rising in tandem with the EUR/USD as US dollar weakness prevailed on the dollar index. The move on Friday came as no surprise to those traders using a currency strength indicator, with the British pound moving to a deeply overbought region on the indicator, and counterbalanced with the US dollar being equally oversold in the slower timeframes. With Thursday's election now on the horizon, and with a slew of opinion polls due for release in the next few days, these are continually signalling a close result with no party likely to have an overall majority in Parliament. As a result we can expect to see further...
In many ways an extraordinary day - particularly for the AUD/USD which has posted a huge candle on the daily chart. In fact the three main USD pairs David & I follow, namely the EUR/USD/ GBP/USD & AUD/USD have all ended in positive territory - with the Aussie the clear leader!!
All three have, of course, benefited from relentless USD selling, and for a view of whether this is set to continue we will have to wait for tomorrow's advance GDP release and also the FOMC. The USD is certainly over extended on the medium term time frames (30 and 60 min) as can be seen on the currency strength indicator alongside the chart above. However, as we've seen with the Aussie today, a currency can stay over extended for very long periods of time. In the higher time frames there is still some room for the USD to fall even further. Indeed the monthly chart for the USD index is...
Cable selling off sharply on the back of poor GDP figure falling to a low of 1.5176, but recovering sharply and back over key support at 1.5220, and with USD continuing to look weak no reason why it cable can't continue higher. It has already touched 1.5260 & beyond this price level we are then looking at 1.53 and beyond.
This afternoon we have the CB consumer confidence release at 2.00 pm London. USD weakness has also played its part in these moves.
USD index is now the one to watch - running into the release and also ahead of tomorrow's FOMC....
For forex traders in London yesterday morning, eurozone PMI and UK retail sales were the main items of fundamental news. And it was Cable again which provided us with some important trading lessons.
The first was how we need to be aware of positioning ahead of any major news release. In the run up to the retail sales number, Cable had been basing around the 1.4920 support platform, having come off the 1.4975 high of the previous evening, thereby creating the start of what looked to be a down candle.
However, as always is it the daily chart which is so important, providing us with a more macro view of any currency pair, and here Cable has been very bullish since bouncing off major support in the 1.4898 region.
Just ahead of the news Cable started to move up, and with the release the usual volatility occurred, which triggered a candle with a 56 pip spread - taking out both longs and shorts!...
Ahead of the German ZEW data this morning, markets are positioning for a move in the euro dollar, with the euro now heavily oversold and the US dollar equally over bought in the faster timeframes. Using the currency strength indicator in multiple timeframes provides a fast and visual picture of currency strength and weakness, with the euro (the gold line) now deeply oversold from the the 5 minute to the 30 minute timeframe, and preparing to reverse the longer term bearish sentiment ahead of the news. Apart from the ZEW, the only other ongoing euro news is of course Greece which continues to weigh on the single currency.
Finally remember that any market or currency can remain over extended for some time, and as always patience is the key coupled with the price action on the charts. The currency strength indicator is always the starting point to identify potential strength and weakness in an individual currency. Then it's time to consider...
In the run up to any UK news the British pound is often one of the best currencies to consider early in the London trading session, either to position ahead of the news, or to wait until the data has been released. However, this morning the most compelling currency has been the Japanese Yen which is very over stretched across a number of time frames on our currency strength indicator. The result has been a number of potential trades to sell the YEN.
This is the principle way we approach the forex market - focus on a single currency & consider its price behaviour against its counter parties to see which is offering the best opportunity to trade safely and profitably. A sell on the YEN usually denotes positive market sentiment and this morning we have seen some mildly bullish moves in Globex on the NQ & ES indices, confirming this risk on sentiment. The USD/JPY is also ticking higher, giving us additional confidence.
Of...
