Starting off the new week with a look at Cable, which has seen bullish support over the last month. Will that run continue with the help of U.K. unemployment right around the corner?
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 12215.03 +0.19% FTSE: 7212.43 -0.96% S&P 500: 2983.07 +0.15% DJIA: 26882.61 +0.32% |
US 10-yr 1.628% +0.078 Bund 10-YR -0.574% +0.062 UK 10-YR: 0.601% +0.095 JPN 10-YR: -0.267% +0.021 |
Oil: 57.62 +1.95% Gold: 1514.80 -0.05% Bitcoin: 10347.96 -0.66% Etherium: 182.83 +0.51% |
Fresh Market Headlines & Economic Data:
- Oil rises as new Saudi minister commits to output cuts
- China’s exports to the US are falling sharply as Trump escalates the trade war
- U.K. manufacturing production output fell by 0.5% for the three months to July 2019
- Bank of England’s Vlieghe warns of risks from new stimulus ideas
- The total UK trade deficit narrowed £14.9B to £2.9B in the three months to July 2019
- UK economy on course to grow 0.3% in third quarter, NIESR says
- German exports rise unexpectedly in July
- The Sentix economic indices improved slightly in September to -11.1 vs. -13.7 in August
- China’s yuan slips, stocks gain after Beijing cuts RRR
- In seasonally adjusted terms, new lending commitments to Australian households rose 3.9% in July 2019, following a 1.9% rise in June
- In the June 2019 quarter, the volume of total manufacturing sales fell 2.7%; the value of total manufacturing sales fell 0.7%
- Japanese lending increases 2.1% y/y in August vs. a 2.3% y/y in July
- Japan logs current account surplus of 2tn yen in July
- Japan downgrades second-quarter GDP as trade war hits business investment
- Japan’s economy watchers are the gloomiest they’ve been in 5 years
Upcoming Potential Catalysts on the Forex Calendar:
- U.S. Consumer credit at 8:00 pm GMT
- Japan M2 money supply at 12:50 am GMT (Sept. 10)
- Australia Business confidence at 2:30 am GMT (Sept. 10)
- China PPI & CPI at 2:30 am GMT (Sept. 10)
- Japan Machine tool orders at 7:00 am GMT (Sept. 10)
- French Industrial production at 7:45 am GMT (Sept. 10)
- Italian Industrial production at 9:00 am GMT (Sept. 10)
- U.K. Unemployment data at 9:30 am GMT (Sept. 10)
- Canada Housing starts & Building permits at 1:30 pm GMT (Sept. 10)
What to Watch: GBP/USD
As mentioned in the intro, bulls have pretty much been in control over the last few weeks as positive global risk sentiment and weak U.S. economic updates have lead to a bearish USD bias, while Sterling bulls have benefited from efforts to stop a no-deal Brexit by UK Parliament. The positive global risk sentiment is likely to continue as we see more positive signs from the U.S.-China trade story to help support this trend higher, but the market is about to retest a consolidation area between 1.2400 – 1.2500, which brings on the question of “where to next?”
Well for the next session or two, the upcoming U.K. unemployment data will likely be the market driver, and based on recent U.K. manufacturing PMI and services PMI data, the odds are more in favor of signs of weakness from the employment sector.
If you’ve been a bear on GBP/USD as most of the market has been given the longer-term trend lower, then a weak update to U.K. data makes that previous consolidation a potential jump in area to play the longer-term trend lower. And with the recent swing lows around 400 pips from the current market levels, the risk-to-reward is very favorable if using the daily ATR of around 100 pips as a stop exit guide.
If you’re a bull on GBP/USD, a surprise positive update to U.K. data could take this short-term trend higher. A break above 1.2400 and retest/hold at that area may draw in more buyers for a short-term play on recent Sterling strength and positive global risk sentiment. And with the next resistance area around 1.2550, then the potential R:R is attractive for a short-term play if, once again, using the daily ATR as an exit guide for your stop.
