Talking Points:
– GBP/USD Gaps Higher Ahead of U.K. CPI on Hawkish Carney Comments
– AUD/USD Remains Capped by Former Support Ahead of RBA Event Risk
– USDOLLAR Fails to Preserve Bullish RSI Momentum; U.S. Inflation to Slow
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
10561.06
10564.9
10546.75
0.06
64.35%
GBP/USD:
Gaps higher as Bank of England (BoE) Governor Mark Carney shows greater willingness to normalize monetary policy despite weaker-than-expected U.K. wage growth.
U.K. Consumer Price Index (CPI) is expected to slow to an annualized 1.8% from 1.9% in July; may help to close the gap from the Sunday open should it drag on interest rate expectations.
The DailyFX Speculative Sentiment Index (SSI) ratio for GBP/USD has narrowed following the decline from earlier this month, but the retail crowd remains net long as it stands at +1.76.
AUD/USD:
Failure to push back above former support (0.9330-40) raises the risk for a near-term topping process in the AUD/USD; lower-high in place?
Reserve Bank of Australia (RBA) Minutes & Governor Glenn Stevens’ semi-annual testimony may generate a more bearish outlook for the AUD/USD as the central bank cuts its growth/inflation forecast.
Despite the RBA’s pledge for ‘interest rate stability,’ market participants appear to be leaning more towards a rate cut rather than a rate hike from RBA as Credit Suisse Overnight Index Swaps (OIS) shows 12-month expectations falling 11bp.
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Read More:
Price & Time: Will There Be A Euro Squeeze?
5 Reasons EUR/USD is Coiling – GBP/USD Waits for UK, US CPIs on Tues
USDOLLAR Daily
Chart – Created Using FXCM Marketscope 2.0
USDOLLAR(Ticker: USDollar):
The Dow Jones-FXCM U.S. Dollar Index retains the range from the previous week, but failure to preserve the bullish momentum in the Relative Strength Index (RSI) raises the risk for a near-term topping process.
Will watch 10,508-509 along with trendline support as the greenback remains vulnerable for a larger pullback.
U.S. CPI to slow to 2.0% from 2.1% in June; weaker-than-expected inflation print may weaken interest rate expectations as Fed looks to halt quantitative easing (QE) in October.
Interim Resistance: 10,590 Pivot to 10,604 (38.2% retracement)
Interim Support: 10,440 (78.6% retracement) to 10,450 Pivot
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Release
GMT
Expected
Actual
NAHB Housing Market Index (AUG)
14:00
53
55
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— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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Source: Daily fx