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Finally, there was a little bit of volatility yesterday albeit some of it come before we could get involved in the market. On the economic data front, it was a day full of surprises with the UK GDP providing the initial catalyst for the GBPUSD to run away – in fact, cable was by far the strongest currency of the day. The New York session started with a bang also, as the US durable goods orders came in much better than expected and the new home sales prices the best it has been since 2007. The significance of this is that GDP estimates could be revised higher on Friday.
The major event risk for the day centred on the Bank of Canada, the BOC spent most of the last 4 months in a very hawkish fashion and raised interest rates at the last two meetings but yesterday the comments were overly dovish – which surprised the market a little bit. The BOC hinted that there would not be another hike for some time, there were plenty of excuses why they shouldn’t hike, and they did state everything was data dependant but seeing is believing at this point.
The GBPUSD is worth keeping an eye out today with the pair battling to break above 1.3270 on all the good news and this resistance level is still very much in play. This will become and bullish/bearish barometer today, I suspect that we may start to see offers building up there as the Brexit negotiations may start to dominate, if I see offers building, I would like to fade this move.
The EURUSD managed to trade above both its 100 hour and 200 hour MA at 1.1785 as the pair raced to 1.1820 last night. This is where the pair has consolidated today and I suspect that price may drift leading into the ECB press conference. The key resistance level to watch today is trading at 1.1840, I suspect that we may see some offers building around these levels. It makes sense considering that the ECB are largely expected to announce QE tapering, because of the event risk in this pair today I will instead sit on the side lines today.
Market Insight Commentary – Forex
In the Zone
- GBPUSD
- EURUSD
- NZDUSD
- USDCAD
Market Insight Commentary – Indices
Important Economic Data out today
- 13:45 EUR Minimum Bid Rate
Consensus: 0.0%
Effect: Actual higher than expected is good for the EUR
- 14:30 EUR ECB Press Conference
Consensus: None
Effect: More hawkish than expected is good for the EUR
- 14:30 USD Unemployment Claims
Consensus: 235K
Effect: Actual less than expected is good for the USD
