Daily Market Report: EURUSD, GBPUSD, USDJPY, USDCAD, AUDUSD
Pound and euro underperform while the greenback tops the performance charts, extreme long sentiment in GBPUSD reaches 84%
EURUSD: Underperforming against the greenback’s top performance
US retail data yesterday was better than expected rising 0.4% overall and at its core, though industrial data disappointed failing to grow at all. And with ZEW sentiment figures plunging for Germany and continuing to contract for the Eurozone, the outlook for the bloc remains bleak. The downward move sent its price crossing below both the 100-day and 50-day MA’s, and erasing its positive technical bias in the process. It also took retail sentiment 6% higher to a heavy long 69% as shorts got enticed into taking profit. Today’s calendar shows we’ve got final CPI figures due for release with expectations for 1.2% growth and well below the ECB’s target. Technical indicators remain closely huddled to each other and to the pair’s price, and hence could easily cause a technical overview shift in the process.
GBPUSD: Heavily underperforming ahead of CPI figures later today
With its unemployment rate unchanged at 3.8%, the rise in wage growth by 3.4% was a significant takeaway from yesterday’s UK employment figures. However, it couldn’t stop the pound from plunging past its short-term support level, and ensuring it lagged the most amongst the FX majors – and by a healthy margin. UK CPI figures are up next, and while rate cut likelihoods are rising after Carney’s comments, higher inflation rates would dent those likelihoods considerably. Expectations are for a 2% increase overall, and for its core – which excludes energy prices – to edge a notch higher to 1.8%. In terms of retail bias, it has pushed higher to an extreme long 84% as shorts get enticed into close out and longs initiate anticipating retracement.
USDJPY: US dollar outperforms but gains limited as technical overview remains consolidatory
While the US dollar was the top performer amongst the FX majors yesterday, the yen didn’t lag too far behind and hence limiting upside movement that thus far has failed shift its technical overview that remains showing negative bias in both the short and mid-term. The bulk of the recent decline however, occurred on anticipation of Fed easing, and hence positive US data the likes of which we saw yesterday could undo those rate cut likelihoods, and take the greenback higher in the process. With any price gains, its retail traders that are the bigger beneficiary, with majority long sentiment dropping 2% on long profit-taking to 65%.
USDCAD: USD strength and energy retreat take the pair’s price off the lows
Although the short and mid-term outlook remains bearish, USD strength from better than expected data (as well as possibly on trade war comments) has aided in taking the pair’s price higher off the lows. API’s deficit was modest at best, and thus far it has been global demand worries that are keeping energy prices from rising further, even if geopolitical tensions have failed to subside. Today’s focus for this pair will be on Canadian CPI figures, expected to remain at healthier 2%+ levels compared to the low inflation faced by other countries.
AUDUSD: Short-term resistance level holding ahead of employment figures tomorrow
Following the RBA minutes yesterday that emphasized the labor market, employment figures released tomorrow early morning will be significant in determining whether the commodity currency can successfully breach its short-term resistance level that has managed to hold thus far. The greenback was the top performer, but Antipodean currencies weren’t that far behind as they relatively outperformed compared to the remaining FX majors. That has prevented the drop from being too sizeable, though Trump’s trade comments regarding tariffs on China would hurt the proxy currency, and possibly improve USD inflows.
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