All eyes were on the RBNZ during the Asian session after central bank members decided to double their asset purchasing program.
Will the next trading sessions inspire more volatility for the rest of the major currencies?
Before we explore one of the more attractive setups, here’s what you missed in the last few hours:
Fresh Market Headlines & Economic Data:
- Trump Senate ally seeks China sanctions over COVID-19 probe
- Fed’s Mester expects economy to rebound some in second half of 2020
- U.S. runs $737.9 billion April budget deficit: Treasury
- UK retail sales plunge 19% in April as COVID lockdown hits: BRC
- Westpac: AU consumer sentiment makes impressive recovery in May
- Australia’s wage growth sluggish before virus hit
- RBNZ doubles asset purchasing program
- NZ dollar falls after RBNZ leaves negative rates on the table
- Japan’s service sector sentiment hits record low again in April
- Dollar on defensive, negative rates debate puts focus on Powell
Upcoming Potential Catalysts on the Economic Calendar:
- U.K.’s preliminary GDP at 6:00 am GMT
- U.K.’s manufacturing production at 6:00 am GMT
- Euro Zone industrial production at 9:00 am GMT
- Fed Governor Powell to make a speech at 1:00 pm GMT
What to Watch: GBP/USD
Data printed minutes ago showed the U.K. economy falling by 2.0% in Q1 2020, the worst since the 2008 Great Financial Crisis.
As bad as the numbers are, however, it’s still a tad better than the 2.6% decline that markets had expected.GBP/USD looks like it’s bouncing from the 1.2250 handle that has been supporting the bulls since late March. In this case, it also represents a range bottom on the 1-hour time frame.
GBP/USD’s volatility analysis tells us that pound bulls still have 70 pips or so before pound bulls can see some exhaustion. This should put Cable at around the 100 SMA and a previous area of interest.
If you’re not sold on the pound maintaining its bullish momentum, or if you think that Powell’s speech during the U.S. session would cause a downside breakout, then you can also wait for a clear break below 1.2250 and aim for 1.2200 or 1.2150.