GBP Capped by Channel Resistance- CAD to Face Sticky CPI Inflation
Talking Points:
- GBP/USD to Break Out of Descending Channel on Scotland ‘No’ Vote
- USD/CAD Risks Larger decline on Sticky Canadian Consumer-Price Inflation
- USDOLLAR at Risk for More Meaningful Correction as RSI Threatens Bullish Momentum
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GBP/USD
- GBP/USD climbs to a fresh weekly high of 1.6408 ahead of the results to the Scotland Referendum, with the Relative Strength Index (RSI) continuing to come off of oversold territory; need to see a break & close above 1.6410 (61.8% retracement) to 1.6430 (50.0 expansion) to favor a bullish breakout.
- However, the GBP/USD may struggle to hold above 1.6000 (50.0% retracement) should Scotland vote to leave the U.K.
- DailyFX Speculative Sentiment Index (SSI) continues to show relative net-short U.S. dollar positioning, but the ratio for the GBP/USD continues to narrow as it stands at +1.09.
USD/CAD
- USD/CAD may face a larger decline over the next 24-hours of trade should Canada’s Consumer Price Index (CPI) boost interest rate expectations.
- Headline reading is expected to show sticky price growth, while the core rate of inflation is expected to increase an annualized 1.8% in August after expanding 1.7% the month prior.
- Strong Canada CPI print may undermine the bullish outlook for USD/CAD; break & close below the August low (1.0809) would invalidate the inverse head-and-shoulders formation.
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Read More:
Price & Time: Time To Be Cautious on AUD/USD?
Big Day for FX Markets - What We’re Watching
USDOLLAR(Ticker: USDollar):
|
Index |
Last |
High |
Low |
Daily Change (%) |
Daily Range (% of ATR) |
|
DJ-FXCM Dollar Index |
10900.2 |
10938.37 |
10884.95 |
-0.18 |
117.31% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar Index falls back from a fresh yearly high of 10,884 amid the mixed batch of data; Dallas Fed President Richard Fisher, the new dissenter on the Federal Open Market Committee (FOMC) is scheduled to speak at 21:00 GMT.
- Despite the bullish reaction to the FOMC interest rate decision, the RSI highlights the risk for a larger correction should the oscillator fail to retain the bullish momentum.
- Break of channel support may bring up former resistance around 10,758 (23.6% expansion) to 10,759 (61.8% retracement).
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|
Release |
GMT |
Expected |
Actual |
|
Initial Jobless Claims (SEP 13) |
12:30 |
305K |
280K |
|
Continuing Claims (SEP 6) |
12:30 |
2466K |
2429K |
|
Housing Starts (AUG) |
12:30 |
1037K |
956K |
|
Housing Starts (MoM) (AUG) |
12:30 |
-5.2% |
-14.4% |
|
Building Permits (AUG) |
12:30 |
1040K |
998K |
|
Building Permits (MoM) (AUG) |
12:30 |
-1.6% |
-5.6% |
|
Fed Chair Janet Yellen Speaks on U.S. Economy |
12:45 | ||
|
Philadelphia Fed. (SEP) |
14:00 |
23.0 |
22.5 |
|
Household Change in Net Worth (2Q) |
16:00 |
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--- Written by David Song, Currency Analyst
To contact David, e-mail [email protected]. Follow me on Twitter at @DavidJSong.
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