Coming Up Today
- UK Revised GDP
- US Durable Goods
After the markets convinced themselves on Wednesday afternoon that the FOMC Minutes indicated a pending easing move from the FED and rallied, doubts have begun to emerge. Triggering the second thoughts was an appearance by St. Louis Fed President James Bullard where he stated “that U.S. data has been somewhat better since the July 31-August 1 Fed meeting.” Traders reacted by selling US equities yesterday, which triggered an overall move lower in riskier currencies. Of note, the Aussie continues to see selling pressure after Australian miners have been reporting gloomy forecasts. The news has raised expectations that the RBA will be forced to cut interest rates to compensate for the potential drop in economic growth from the country’s large mining sector.
Charts to Watch
GBPUSD: After breaking out above its long term 1.5750 resistance (see chart), the GBPUSD nearly hit 1.5900. Since then it has remained steady, but a break below 1.5850 could trigger profit taking. Looking ahead, on any weakness, the 1.5800 figure will be the line of the sand for bulls. If the GBPUSD were to trade lower, but stay above 1.5800, it would point to growing demand for the pair.
AUDUSD: Keep your eyes on the 1.0400 figure. The pair has been in an uptrend channel since May (see chart) which its beginning to fall apart. However, the pair has managed to find support at 1.0400. As such, if 1.0400 breaks, it could be “look out below” time and trigger a much larger move lower in the pair. For Aussie traders, its also worth taking a look at the EURAUD. The pair has been trending higher on renewed Euro support versus the Aussie.
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