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In the Zone
- In the wake of Hurricane Harvey, we have Hurricane Irma threatening to hit Puerto Rico this morning and reaching Florida by Friday. If this is the case then keep an eye on the dollar, having to pick up the pieces of two major hurricanes will force the Fed to keep rates on hold – dollar will take a back seat.
Both Canada and the US enjoyed Labour day celebrations yesterday and as a result this brought the market to a halt by lunchtime as there was no liquidity in the market. This has led the market to drift a little this morning as the market lacks some direction, I suspect that either the London or New York session will kick it off.
A perfect example of low liquidity trade was the GBPUSD last night, the pair dipped by close on 40 pips as the European desks signed off for the day. It was one of those moves that was exaggerated because of the low liquidity, usually a good move to fade – I would have been left a little bit hesitant to take the trade as the pair lacked any conviction.
There are a couple of brewing set ups, that we discuss in the morning video, starting to take shape for the week, but I suspect that we may have to wait for the momentum to pick up before we take the trade – also keep in mind that there could be some kind of tweet around the looming North Korean crisis that halts any potential moves.
Keep an eye out for the afternoon video that tries to tie everything together.
Important Economic Data out today
10:30 GBP Services PMI
Effect: Actual higher than expected is good for the GBP
11:10 AUD RBA Governor Lowe Speaks
Effect: More hawkish than expected is good the GBP
16:00 USD Factory Orders
Effect: Actual higher than expected is good for the USD
Tentative NZD GDT Price Index
Effect: Actual higher than expected is good for the NZD
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