Talking Points:
– Gold Climbs to Fresh Monthly High- Threatens Bearish RSI Momentum.
– GBP/USD Breakout to Gather Pace on Strong U.K. Retail Sales.
– USDOLLAR Fails to Benefit From Sticky CPI- FOMC Minutes in Focus.
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XAU/USD
Chart – Created Using FXCM Marketscope 2.0
Gold (XAU/USD) appears to be making a larger assault at the bearish RSI momentum as it climbs to a fresh monthly high of $1129; bullish trigger raises the risk for a larger correction in the precious metal.
Will keep a close eye on $1138 (50% retracement) in light of the near-term rebound, with the key area of interest coming in around the former support zone, $1145 (78.6% expansion) to $1146 (50% retracement) amid the weakening outlook for global growth.
DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long XAU/USD since May, with the ratio coming off of recent extremes as it narrows to +1.24, with 55% of traders long.
GBP/USD
A series of closing prices above 1.5630 (38.2% retracement) to 1.5650 (38.2% expansion) may encourage a further advance in GBP/USD especially as the bullish RSI momentum continues to take shape.
With U.K. Retail Sales projected to rebound 0.4% in July, signs of a stronger recovery may spur a growing dissent within the Monetary Policy Committee (MPC) & heighten the bullish sentiment surrounding the British Pound.
Will keep a close eye on the topside targets amid the near-term breakout, with the next region of interest coming in around 1.5750 (23.6% retracement) to 1.5790 (50% expansion).
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USDOLLAR(Ticker: USDollar):
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
12000.53
12005.89
11979.28
-0.01
52.23%
Chart – Created Using FXCM Marketscope 2.0
Dow Jones-FXCM U.S. Dollar holds within the previous day’s range ahead of the Federal Open Market Committee (FOMC) Minutes even though the U.S. Consumer Price Index (CPI) were in-line with market expectations; suggest market participants are waiting for clarity on the monetary policy outlook.
Given the unanimous vote along with the limited commentary following the July 29 interest rate decision, may get more of the same as the Fed continues to look for a further improvement in the labor market.
Will continue to watch 12,049 (78.6% retracement) as the USDOLLAR continues to come off of near-term support around 11,951 (38.2% expansion) to 11,965 (23.6% retracement).
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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