Talking Points:
– USDOLLAR Struggles Ahead of Fed Amid Subdued Price Growth.
– GBP/USD Rallies to Fresh Monthly High on Faster Wage Growth, Hawkish BoE.
– NZD/USD Rebound Vulnerable to Widening New Zealand Trade Deficit.

For more updates, sign up for David’s e-mail distribution list.

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11961.87

12005.15

11949.98

-0.31

99.64%

Chart – Created Using FXCM Marketscope 2.0
Dow Jones-FXCM U.S. Dollar struggles to hold its ground ahead of the Federal Open Market Committee (FOMC) interest rate decision as the U.S. Consumer Price Index (CPI) comes in short of market forecast, with the core rate holding steady at an annualized 1.8%.
With narrowing expectations for a September rate hike, the fresh updates (growth, inflation & interest rate) coming out of the central bank is likely to drive future price action as market participants gauge the prospects for a 2015 liftoff.
Failure to close below 11,951 (38.2% expansion) to 11,965 (23.6% retracement) may generate range-bound prices ahead of the Fed rate decision.

Join DailyFX on Demand for Real-Time SSI Updates!

GBP/USD
Chart – Created Using FXCM Marketscope 2.0
Despite the 1.2K increase in U.K. Jobless Claims, GBP/USD climbs back aboveformer support around 1.5460 (23.6% retracement) amid signs of stronger wage growth, while the Bank of England (BoE) remains upbeat on the economy and points to external factors as the key condition for the delayed normalization cycle.
With U.K Retail Sales projected to increase another 0.1% in August, signs of a stronger recovery may heighten the appeal of the sterling as a growing number of central bank officials adopt a hawkish outlook for monetary policy.
DailyFX Speculative Sentiment Index (SSI)shows retail crowd remains net-long GBP/USD since August 21, but the ratio remains off of recent extremes as it narrows to +1.41, with 59% of traders long.

NZD/USD
Despite the recent series of higher highs & lows, the failed attempts to close above 0.6370 (50% retracement) to 0.6400 (61.8% retracement) may spur a near-term decline in NZD/USD as New Zealand’s 2Q Gross Domestic Product (GDP) report is expected to show the economy growing an annualized 2.5% following the 2.6% during the first three-months of 2015.
Signs of a slowing recovery may reinforce expectations for further monetary support, with market participants increasing bets for another rate cut at the October 29 policy meeting.
The long-term bearish outlook favors the approach to sell-bounces in NZD/USD, with a break of the monthly opening range raising the risk for a more meaningful decline in the exchange rate.

Join DailyFX on Demand for Real-Time SSI Updates Across the Majors!

Read More:
Price & Time: Gold Move Signaling Fed Disappointment?
AUDJPY Approaching Monthly Open- Range Break to Determine Scalp Bias

— Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David’s e-mail distribution list, please follow this link.

Trade Alongsidethe DailyFX Team on DailyFX on Demand

Looking to use the DailyFX Trade Signals LIVE? Check out Mirror Trader.

New to FX? Watch this Video

Join us to discuss the outlook for the major currencies on the DailyFXForums

Source: Daily fx