Cable Rises As UK Reports Highest Retail Sales Growth In 3 Years

EUR/USD

It’s a good thing I waited on trading this pair, as its unpredictabilty was demonstrated again today as the Euro rallied to 4300 again. I’m still bearish on the pair as a bearish divergence has formed on the 4hr chart, and stochastics have crossed down in overbought territory. The only thing that concerns me is that daily stochastics are still trending up. Currently the pair is trading around 4283, and I would look for it to move down to 4250.

GBP/USD

The Cable finally broke out of its range today as it breached 2.0400 and moved all the way up to 2.0500. However, since touching 2.0500, the pair has dropped back down to 2.0450. A clear bearish divergence has formed on the 4hr chart and stochastics are trending down. I would look for the Cable to continue dropping tomorrow to at least 2.0400.

USD/CHF

Oh happy day! Just like I thought, the Swissy exploded out of its range between its 100 and 200 SMA on the 4hr chart, and I was able to jump in and grab some major pips! I hope you were able to do the same. The pair has now halted just below 1700. 4hr stochastics have crossed up in oversold territory but daily stochastics are trending down really nice. I’m going to hold off for now and wait to see if this pair retraces or continues on this downtrend.

USD/JPY

The Dollar dropped down nicely to 116.00 and beyond like I said yesterday, and we may see more drops. Daily stochastics are trending down very nice, and I wouldn’t be surprised to see the pair continue dropping down to 115.00 by tomorrow. The only thing that has me kind of worried is that 4hr stochastics are in oversold territory. We all know though that when the Yen trends, it REAALLY trends, so the downward movement could still be a strong possibilty in the short term.

I’m not really big into fundamentals but I feel that they are important to discuss. In this section I will be posting fundamental tidbits that I find interesting from various sources. If you find an article that you think would benefit everyone, please email me (Big Pippin) with your username, the article, and a link to where members can read the entire article.

Now onto the Fundamentals:
  • UK September retail sales saw the highest annual growth in 3 years:
    • The Office for National Statistics reported that retail sales in September rose 6.3 pct from a year ago, the highest rise since September 2004 and above analyst expectations for a 5.6 pct increase. In August sales rose 4.8 pct year-on-year, revised down from the earlier estimate of 4.9 pct.
  • Eurozone ministers surely don’t want the Euro to be this strong….right?
    • As I said yesterday the Eurozone ministers were beginning their meeting to discuss the weak dollar, yen and renminbi… So… Some traders believe that means the ministers want the euro to be weaker… I believe traders that believe this are barking up the wrong tree… The European Central Bank (ECB) loves the strong euro, and I’ve explained why on several occasions in the past, but for those who missed class on those previous 1,000 times I’ve explained it… The strong euro does so much for the ECB’s mantra to provide price stability… A strong euro fights inflation, and increases its allure for foreign investment into the country. There are more reasons like the price of oil being reduced, so, you can see what I’m talking about now…
  • Housing Data will be extra important with the 50 BPS rate cute:
    • Let’s not blow off the housing data… After a 50 BPS rate cut last week, and the dollar’s fall VS the euro, I think the housing data will be very important.
  • The Chinese Yuan and what it could mean for the Dollar’s future:
    • And of course, if the Chinese do finally allow a much faster increase in the value of their currency, their need for holding US dollar reserves will likely shrink (i.e. much of the reserve build comes from the pegging process). And dollar for dollar they can buy more oil with a stronger currency (and every other major raw material they input—including pigs). At minimum, if this plays out, it could be yet another sentiment hit to the dollar.
News events to watch for tomorrow :
  • 4:30am ET– GBP Retail Sales

For a list of all of tomorrow’s news events, check out our Forex Calendar