Talking Points:
– Dovish BoE Fails to Spur Fresh Monthly Lows for GBP/USD; MPC Retains Couse for Monetary Policy.
– NZD/USD Breaks Out of Descending Channel Despite RBNZ Verbal Intervention.
– USDOLLAR Carves Narrowing Range as Bearish RSI Divergence Takes Shape.
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GBP/USD
Chart – Created Using FXCM Marketscope 2.0
May see GBP/USD continue to pare the bearish market reaction to the Bank of England (BoE) Inflation Report as it holds above the opening monthly low (1.5788); will the Relative Strength Index (RSI) hold above oversold territory?
Despite the downward revision to the U.K.’s growth/inflation forecast, looks as though BoE remains on course to normalize monetary policy in 2015.
Nevertheless, DailyFX Speculative Sentiment Index (SSI) shows retail-crowd has been net-long GBP/USD since October 28, with the ratio currently standing at +1.47.
NZD/USD
Despite the verbal intervention from Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler, the ongoing concerns for a housing bubble may have improved the appeal of NZD/USD as the central bank refrains from removing the temporary restrictions on private-sector lending.
A break above the 0.7900 handle would bring up the 78.6% retracement from the October high coming in around 0.7950-60 as the RSI fails to retain the near-term bearish momentum.
Nevertheless, may continue to see lower highs & lows on a longer-term basis as the RBNZ remains in no rush to further normalize monetary policy.
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Read More:
Price & Time: USD Waiting On A Catalyst
GBP/USD Continuation, EUR/GBP ST Triangle in Play after BoE Inflation Report
USDOLLAR(Ticker: USDollar):
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
11249.40
11249.86
11214.17
0.11
58.71%
Chart – Created Using FXCM Marketscope 2.0
Dow Jones-FXCM U.S. Dollar Index continues to face a narrowing range even as Philadelphia Fed President Charles Plosser, one of the dissenters on the Federal Open Market Committee (FOMC) argues to normalize monetary policy sooner rather than later.
As a bearish formation takes shape on the SSI, need to see a topside break in the oscillator to look for a further appreciation in the greenback.
Even though the wedge formation favors a continuation of the bullish trend, a close below 11,211 (23.6% retracement) should highlight a larger correction for USDOLLAR.
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Release
GMT
Expected
Actual
Wholesale Inventories (SEP)
15:00
0.3%
0.2%
Wholesale Trade Sale (SEP)
15:00
0.2%
-0.1%
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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