There were three major catalysts in last week’s trading. The first one was China. Disappointing data from the Asian superpower (particularly its trade figures) fueled speculations that the country, which was once dubbed as the engine for global growth, is now losing its momentum.
Then, there was the FOMC meeting minutes. According to the report, board members didn’t really see eye to eye on when they would taper asset purchases. While some think that it would happen this year, there are those didn’t see it happening until 2014.
Lastly, political trouble in the euro zone also spooked the markets a bit last week. Portugal has reportedly asked to postpone the Troika’s review of its reforms, suggesting that the country had not done much to get its balance sheets in order.
I think these catalysts would continue to dictate price action in the coming days. China would likely continue to make market headlines especially since its GDP figure for Q2 2013 confirmed speculations that growth is indeed slowing. It printed a 7.5% reading, which was lower than the 7.7% forecast. (Good job Forex Gump on the prediction!)
Also, Ben Bernanke is scheduled to give a speech later on in the week. Questions from the U.S. Congress can put the Fed head honcho in the hotseat and lead him to drop more hints about the direction for monetary policy. Meanwhile, renewed concerns about the euro zone financial crisis could be brought into the spotlight ahead of the G20 meetings this coming weekend.
On the 4-hour timeframe, we see that the pair is stuck between the 100 and 200 SMAs. I’m still pretty bullish on the dollar because of the Fed’s not-so-dovish stance on monetary policy (relative to other central banks) however, I’m not gonna be stubborn and force my bias into this trade. Instead, I will let the market decide. I will probably go long at the upside break of consolidation around .9520 and short when price closes around .9400.
GBP/USD: Slightly Bullish
Another setup I’m eying is the potential long on GBP/USD‘s hourly chart. I think the trend has changed to the upside as price broke through two significant moving averages and price has made a higher high. All I have to do now is wait for a retracement and find a good price to jump in long.