Dollar mildly weaker after revised GDP
After consolidating for most of the day, dollar weakens again in early US session. US Q2 GDP was revised higher to 2.9% from advance estimate of 2.5% but was slightly below economists’ expectation of 3.0%. Growth in Q1 was 5.6%. Price increased 3.3%, unchanged from advanced estimates. Personal consumption expenditures revised to rose at a 2.6% annual rate from 2.5%. But PCE core was revised down to 2.8% from 2.9%.
Dallas Fed President Fisher said that higher energy prices and past rate hikes have curbed economic expansion. However, he also mentioned that inflation is still not well-behaved. In general there’s nothing new from Fisher.
During European session, GBP/USD spiked higher to 1.9044 on much better than expected UK CBI trade survey which posted a reading of 12 in Aug, up from 7 in Jul and above expectation of a drop to 5. But the surge was brief and cable quickly retreated back to established range as traders await US data
GBP/USD
Daily Pivots: (S1) 1.8909; (P) 1.8968; (R1) 1.9039;
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Cable’s rally resumes in US session by breaking decisively above 1.9024 resistance. The rebound from 1.8829 is considered resumed and further rise towards 1.9142 is expected to follow as long as cable stays above 1.8971 minor support.
In the bigger picture, cable’s rally from 1.8090 made a short term top at 1.9142, slightly below 1.9199 projection target with bearish divergence condition displayed in daily MACD and RSI, as well as possibly in weekly RSI, an important medium term top is around the corner, if not formed yet. So a decisive break of 1.9199 (with a weekly close above) is needed to confirm the whole up trend has resumed for 1.9554 (2004 high). Otherwise, there is substantial risk of larger scale correction/consolidation.
On the downside, below 1.8829 support will shift focus back to 1.8774 cluster support (38.2% retracement of 1.8174 to 1.9142 at 1.8914 at 1.8772).
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.
Shing-Ip Tsui is the founder and CEO of
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