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In the Zone
- A bit of a minor story at present, but one I think has more significance in my opinion that a lot of others. US are threatening to put sanctions over China, it will be interesting to see the outcome of the world two biggest economies butting heads.
I was waiting to see yesterday if the market would continue its recent recovery or if Monday was merely a relief rally. We really did not get many answers as most major pairs continue to hover around major support and resistance levels, there was not much in the form of economic data to move the market and there is a blackout out of the Fed because of the looming interest rate decision next week.
There was a lot of action in cable as the GBPUSD found a nice bid on the back of much higher than expected inflation data. It did take its time to move above a major trend line level at 1.3237, but once New York traders got to their desk, the currency moved above 1.3300. This is the highest level it has traded at since September 2016, I am interested in looking to fade this move but I wait for London to get online.
The only other pair to enjoy a little volatility was the USDJPY, this is generally a fundamentally traded pair and the fact that fears start to lesson of a conflict with North Korea the pair tends to get behind the dollar. The momentum that came from all three sessions allowed for the pair to trade through both the 100 and 200 hour MA at 109.31 and 109.75 respectively. Trend line resistance comes in at 110.50 and this will be a key level to watch as I suspect that some traders may start building offers there.
The market did not give us much yesterday and I am cautious to get caught in any big positions, I continue to focus my attention to the AUDUSD and Oil prices today these are the two that offer the most opportunity for me.
Keep an eye out for the afternoon video that tries to tie everything together.
Important Economic Data out today
10:30 GBP Average Earnings Index
Effect: Actual higher than expected is good for the GBP
14:30 USD PPI
Effect: Actual higher than expected is good for the USD
16:30 USD Crude Oil Inventories
Effect: No consistent effect on the USD
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