The British pound is seeing some action today after dovish comments from the Bank of England Governor Mark Carney. We’ll check out GBP/USD as there seems to be a short-term setup in the works if we see more volatility.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on USD/CHF with Swiss events ahead, so be sure to check that out to see if there is still a potential play!
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 13298.84 +0.54% FTSE: 7561.81 -0.16% S&P 500: 3243.33 +0.19% DJIA: 28614.31 +0.11% |
US 10-yr 1.891% +0.017 Bund 10-YR -0.225% +0.033 UK 10-YR: 0.815% -0.006 JPN 10-YR: -0.007% +0.013 |
Oil: 61.86 -1.34% Gold: 1573.60 -0.04% Bitcoin: 7892.29 -1.06% Etherium: 138.11 -1.39% |
Fresh Market Headlines & Economic Data:
- China’s Vice Premier Liu to sign US trade deal in Washington next week
- Oil steadies around levels prevailing before U.S.-Iran attacks
- U.S. weekly jobless claims fall, but labor market momentum waning
- Fed’s Clarida says rate cuts were ‘well timed,’ policy likely to remain appropriate
- Canadian Housing Starts Trended Lower in December to 212K vs. 220K in November
- The total value of building permits issued by Canadian municipalities decreased 2.4% to $8.1B in Nov.
- German Exports in November 2019: -2.9% on November 2018
- EU’s Barnier says a year not enough to agree full deal with UK
- EU is still planning for no-deal Brexit, says Michel Barnier
- Bank of England governor hints at imminent interest rate cut
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- ECB Lane speech at 3:45 pm GMT
- BOC Governor Poloz speech at 7:00 pm GMT
- Fed Evans speech at 7:20 pm GMT
- Australia Services Index at 9:30 pm GMT
- Japan Household spending at 11:30 pm GMT
- Australia Retail sales at 12:30 am GMT (Jan. 10)
- Japan Leading economic index at 5:00 am GMT (Jan. 10)
What to Watch: GBP/USD
Earlier in the session, Sterling saw heavy bearish action thanks to comments from Bank of England Governor Mark Carney that hinted at a rate cut coming soon from the BOE. We can see on the one hour chart above of GBP/USD, this happened during the morning London session, but the bulls managed to stop the bleeding just above the 1.3000 major psychological handle. We’re even seeing a bounce right now, likely profit taking on the surprise move, but is a pretty big deal for Sterling, so this bounce may be an opportunity for GBP bears to jump back in at a better price.
If you are a bear on GBP/USD, watch out for resistance to start forming around the 1.3050 – 1.3070 area, which happens to be not only the Fibonacci retracement area of the swing move lower, but also the broken support area last seen at the beginning of the month. If the market reverses there and the themes remain Sterling bearish / USD bullish (e.g., improving U.S.-China trade tensions, fading U.S.-Iran conflict escalation fears), it’s probably a good idea to setup a short position then.
If you’re a bull on GBP/USD, any comments that walk back on the Governor’s rate cut rhetoric will likely draw in some Sterling buyers, as well as positive commentary on the odds of a successful Brexit deal. In this situation, a break above the falling ‘highs’ (likely around th 1.3100 handle) should be a signal to get interested in a long position, with a target of the previous swing high area between 1.3200 – 1.3250 being a realistic one for a swing position.