Analys från DailyFX
British Pound Finds New Role as Haven During Emerging Market Turmoil
INTRADAY PERFORMANCE UPDATE: 09:30 GMT
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): +0.18% (–0.31%prior 5-days)
ASIA/EUROPE FOREX NEWS WRAP
The British Pound has emerged as an unlikely top performer and perhaps safe haven du jour as few developed economies have seen the resiliency the UK economy has since May. The past week or so, the Sterling has been quite strong against the commodity complex in particular, as emerging market weakness has started to impact the entire Asian-Pacific region.
Further Sterling gains shouldn’t be ruled out, even if the currency may be overbought in the near-term per technical indicators on H4 and daily timeframes (in particular against the Australian, New Zealand, and US Dollars. So far in August, the GBPAUD has appreciated by +2.60%; and over the course of the 3Q’13 so far, +4.24%. By comparison, the AUDUSD is up by +0.48% in August; and down by -1.25% in the 3Q’13.
So, as we wait for the most up-to-date information on the Fed’s QE3 taper today in the form of the July FOMC Minutes, the fact that the British Pound is the top performer and only currency to out maneuver the US Dollar bodes well. Even if the GBPUSD turns on signs of ‘Septaper’ coming to fruition, the British Pound should remain well-favored elsewhere for the foreseeable future.
GBPAUD 15-min Chart: August 14 to 21, 2013
Taking a look at European credit, peripheral bonds have continued to leak higher as European equity markets have struggled the past few days, proving to be a slight negative influence on Wednesday.Should this relationship persist – weaker credit and equities – the Euro could face increased pressure over the next several sessions.
The Italian 2-year note yield has increased to 1.860% (+1.5-bps) while the Spanish 2-year note yield has increased to 1.746% (+3.0-bps). Likewise, the Italian 10-year note yield has increased to 4.323% (+2.0-bps) while the Spanish 10-year note yield has increased to 4.465% (+1.4-bps); higher yields imply lower prices.
Read more: Euro Advances as Aussie, Kiwi Sink on Heightened Pre-FOMC Volatility
ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION
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FX TECHNICAL ANALYSIS – CHART OF THE DAY
GBPUSD (D) – I maintain: “The pair continues to impress since early-July but there are signs of near-term exhaustion developing. Gains have been harder to come by the past few days despite broader US Dollar uncertainty; and the British Pound has been less enthused by stronger than expected data.
”Now, the daily RSI and Slow Stochastics (5,3,3) are approaching overbought territory as the pair nears resistance. Mid-June swing highs, the 61.8% Fibonacci retracement of the yearly high low, and ascending channel resistance (July 9 and August 2 lows to July 23 high) all come in between $1.5720 and 1.5760 this week. “
— Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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