Mark ‘The Special One’ Carney did not disappoint yesterday. He was explicitly clear on when and where rates may rise with a target on Unemployment (below 7%) – target not a threshold – though I’m not sure where we might have heard that before.
BoE’s estimates put that somewhere potentially in 2015 although market participants highlighted the BoE’s inability to forecast CPI and guessed this was more like 2014 some time. Despite the reality Dovish tone, with a general ‘we have a long way to go to get out of the woods yet’, the low rates for a long time spiked GBPUSD higher and dragged the USD lower along with it, with the pair finally coming to rest just below the 1.5500 mark.
I have to say The Special One has impressed us so far and we really enjoyed his relatively direct and clear tone today. Not to say we didn’t enjoy good old Merv, but in our opinion Carney deserves the praise he is getting.
As for Aussie unemployment data and Chinese data over night, expect this to impact the AUDUSD (no surprise)
EURUSD
RTAS Order Book systems currently long the pair and amazingly today it found more Retail Sellers. Not entirely sure how it found more sellers, but as it did the pair pushed through the 1.3330 mark.
Realistically this pair will struggle to push higher without at least some reversals in the Order Book to clear a few extreme orders. Longer term we prefer US Dollar strength to return on confidence in tapering, but we will need to see some good US jobs data for that or complete Order Book exhaustion. For the momen,t our RTAS systems remain long although only just, we suspect August is going to get choppier.
Pair looks as if it is gunning to test highs now at the 1.3400 mark. Interesting to watch Initial Jobless out of the US tomorrow as that could easily have an impact on the pair. If we get some Retail Buying on dips we could see this pair reverse relatively easily and fall into a rather wide range.
GBPUSD
RTAS Order Book systems are still holding long this pair from the 1.5180 mark, which today allowed it to really pick up some gains as it did. Retail Traders really sold all the strength in the pair only to start buying on the slight dip towards the close. We suspect a push lower from these levels is likely to find some aggressive retail buying which would switch the RTAS system short. This could have been the last hurrah we have been looking for.
The 200 day SMA is likely to act as a significant resistance to this pair as it has done in the past, a creep above could potentially offer some further support but longer term we still like this pair lower, that said until we get confirmation of the move lower we continue to hold longs.
AUDUSD
RTAS Order Book system booked profit on longs today and entered short ahead of the unemployment figures and Chinese data on Retail buying in the pair. A lot will depend on data tonight but there is room in the Order Book for trades in both directions.
This pair has found some interim support around the 0.8900 level. Although we maintain the outlook that this pair is carving out a bottom, we still suspect further chop and could easily see a push lower.
USDCHF
Order Book systems holding short this pair, although now have reverted to extreme levels we could see the turn in this pair and the system start to look for long trades. Pair now sits at strong support and its next move will be key. If current levels break we could see a final test of the 0.9150, if it holds we suspect we could start to see the reversal around these levels.
Daily chart looking relatively supported but on a relative knife edge. Overall we generally prefer longs at these levels but would like to see some form on confirmation. A nice daily Pin bar testing the 0.9150 level would be a really nice reversal signal. US jobs data tomorrow?
EURAUD
The RTAS Order Book system did a complete U-turn today, entering longs then reshorting at the same level as yesterday at the 1.4810 mark. The extremes in the Order Book mean there is little room for pushes higher without some form of correctional move after each one; although we are looking for a more general turn in this pair to align with EURUSD weakness and an AUDUSD correctional bounce, we could still see further chop higher before this occurs.
Further resistance on the daily chart at the nice round 1.5000 figure, we also have the most extreme RSI divergence we have seen in a long time, typically this would point to further shorts but we really need to start seeing the turn in both EURUSD and AUDUSD for this to gain some traction for a move lower, we know deja-vu but frankly this pair and its Order Book seemed to repeat itself today.
