Strength in sterling and Canadian dollar
Dollar is generally weaker today across the board
but weakness is not the same against different currencies. Sterling’s strength is more apparent across the board after boost from stronger than with GBP/USD now testing 1.9 level again, EUR/GBP dipped to fresh 10 month low of 0.6702. GBP/CHF also surged to as high as 2.3695. EUR/USD and USD/CHF is still pretty steady while USD/CAD dropped sharply to as low as 1.1187.
Data from US sees jobless claims coming in slightly higher than expected at 318k while leading indicator dropped 0.2% in Aug. Philly Fed index to come next which is expected to drop from 18.5 to 15 in Sep. Canadian retails sales surged by 1.5% mom in Jul, boosting the rally in CAD against dollar. UK CBI industrial trends provided the fuel for Sterling’s broad based rally by improving to a 21-month high of minus 5, much better than expectation of minus 10.
GBP/USD
Daily Pivots: (S1) 1.8812; (P) 1.8871; (R1) 1.8943;
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Cable’s rise from 1.8735 extends to as high as 1.8997 today. As discussed before, sustained trading above 1.8918 confirms the corrective fall from 1.9142 has completed. At this point, as long as cable stays above 1.8902 minor support, rebound from 1.8602 is still expected to extend further towards 1.9090 resistance.
Touching of 1.8902 will turn intraday outlook consolidative and risk retreat to 4 hours 55 EMA (now at 1.8838). But we’d expect downside to be contained well above 1.8735 and bring further rally. However, below 1.8735 will argue that corrective fall from 1.9142 has resumed and put 1.8538 cluster support (61.8% retracement of 1.8174 to 1.9142 at 1.8544) into focus again.
In the bigger picture, the whole medium term rally from 1.7047 could have ended at 1.9142 already. With bearish divergence condition in daily MACD and RSI as well as weekly RSI in the background, there is substantial risk of larger scale consolidation before a firm break above 1.9199 resistance (61.8% projection of 1.7230 to 1.9024 from 1.8090). And 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).
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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