The British Pound may find a reason to rally vs the USD on upcoming UK GDP data. If the market is pleased by the data we could see 1.70 in the near future. However some caution applied after the data is released because we have US GDP tomorrow followed by the Fed and NFPs Friday. Gold has settled below $1300 again as the risk on theme takes hold.
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At 8:30 GMT UK GDP is set to release, this has a lot of potential for a GBP breakout. 1st Q GDP is expected to come in at 3.2% vs 2.7% prior. Annualized growth would be the fastest YoY since 4thQ of 2007 and 1stQ GDP expanding to 0.9% would be fastest since QoQ since 2ndQ of 2010.
AUD/USD looks like it may have topped 3 weeks ago and should continue to trend lower. The Australian economy is lagging, with CPI coming in weaker than expected last week which will put pressure on the RBA to act if things to not improve.
For now we are holding short, it is trading just below the 0.236 fib which is at 0.927 so the next target would be 0.382 fib around 0.915.
GBP/USD is currently trading near highs for the day, we are looking at a possible trend continuation on the back of some GDP data. If the market is pleased with the data we could possibly see 1.70 in the near future. However some caution should be applied due to the fact that we have a heavy amount of US data this week as well.
For now we are holding a small long based on the recent inverse head and shoulders breakout pointing to trend continuation.
NZD/USD is currently trading near lows for the day (7:00 GMT), NZD/USD has fallen even after the RBNZ hiked rates 25bps from 2.75% to 3.00%. There is always the possibility for further downside until we break out of this downward RSI trend. Major support is market by the long term 0.236 fib at around 0.85. Look for a bullish RSI break for possible NZD/USD continuation higher.
For now we are holding a small long.
USD/JPY has been able to break out of this triangle again however it could fall back below easily. Caution should be seen USD/JPY is facing some near term trend line resistance dating back to the beginning of 2014. RSI is sitting right above neutral 50 on the daily chart. Look for 102.2 and 101.9 for possible support and 103 for resistance. The fact that the BOJ may not add any more QE to their already large stimulus program is putting some speculation that we could see a move lower soon.
If we break down below the trend line this week we could see 100 soon which would see a lot of support. Right now it makes more sense to be short since we are closer to the top down trend line of the triangle pattern. If we see a maintain in tapering USD/JPY could get a temporary boost but if NFP under performs market expectations then we could still see a trend line break.
We are currently flat.
USD is facing some resistance near term, reaction low resistance and down trend resistance may prevent further USD strength for the time being. USD could possibly rise this week on a continued taper and very good data. Expectations are very high for the USD and this is leaving us with a cautious outlook for the time being.
Gold has dropped back below $1300 and could face a new wave of selling. Gold is currently trading around $1293 (7:10 GMT).
SPX500 has failed to fall much further as market sentiment is currently very bullish, we could possible see new all time highs this week. If we are unable to press above all time highs there is a risk of steeper declines.
I have added an overlay of Gold to the SPX500 to prove a point that the two are not always inversely correlated. Last month Gold has been pretty correlated vs the SPX500, maybe on possible bubble or market top fears but has dropped off recently…