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MORNING BRIEF
A range-bound move across the board for almost all major currency pairs was the theme of yesterday’s sessions. Euro and Sterling edged just a bit higher before retracing back down to previous levels as the currency market seems to be holding its breath until some kind of a solution appears in the US shutdown issue. Yesterday President Obama kind of opened the door to the House Republicans stating that he’s willing to discuss issues such as spending for health care but he also said that these talks should not be conducted under “threats of a government shutdown or economic chaos.” At the same time, the shutdown of the government is clearly starting to take a toll. Most notably in US consumer confidence. According to the Gallup daily tracker of US Economic Confidence the index has plunged to -34 down 14 points from just two weeks ago and at its lowest level since December 2011. However, we feel that this is only a temporary situation and there is a clear reason why these tensions haven’t caused a Dollar sell-off as of yet: this ‘crisis’ is completely manufactured and part of a political game-play and has nothing to do with the economic conditions in the US, thus investors globally remain confident that a solution will be reached either sooner or later.
Several news events during the day, the focus is in the UK
There are several news events to pay attention to today and we feel that there are going to be opportunities for trading as well. Early in the morning at 9.30am UK time, the British Industrial Production is expected to rise for August and this might just be the spark needed to re-ignite the bullish rally in the Pound/Dollar pair. Later in the day the German Industrial Production is expected as well and this could prove to be beneficial to the Euro/Dollar pair. Coming at 15.00 the GDP Estimate for the UK economy from the NIESR institute could also propel the Pound higher and finally we are very interested to see what the Fed Minutes from the FOMC meeting on Sept. 17-18 hold. Busy day for news traders, let’s make it a successful one.
Economic Calendar
|
Time |
Currency |
Event |
Importance |
Forecast |
Previous |
|
9.30 |
GBP |
UK Industrial Production |
Medium |
-0.7% |
-1.6% |
|
11.00 |
EUR |
German Industrial Production |
Medium |
-1.4% |
-2.2% |
|
15.00 |
GBP |
NIESR GDP Estimate |
High |
0.9% |
|
|
19.00 |
USD |
FOMC Minutes release |
High |
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TECHNICAL ANALYSIS & LEVELS
EUR/USD
Euro edged just a bit higher yesterday, hitting our first target at 1.3600 before retracing and closing out our trade at the breakeven price. We’re not sad about that, it’s important to be able to capture even 20-30 pips in periods of low volatility. For now, the Single currency is trapped in a range between 1.3550 and 1.3600 and it will take some catalyst to drive it out of it. We will wait it out and in case the break happens on the upside then our entry is just above 1.3600 with targets at 1.3630 and 1.3680 and a stop below 1.3550. In the opposite case that the pair breaches below 1.3550 then we will follow with a short trade just below that level and targets at 1.3520 and 1.3470, stop placed above the 1.3600 mark.
GBP/USD
The Pound also edged higher yesterday but not without giving us a scare before that. The pair threatened to break below the 1.6050 area but strong demand lifted it higher, revealing strong conviction among investors that the Pound is bound to reach higher. Our long entry was triggered above the 1.6100 mark and we got out just in time to capture 20 pips around the 1.6120 mark that was our first target before hitting stops at the breakeven price once again. Now for the day, we feel that the Pound will move higher and there are news events that can provide the steam for this move. Our scenario will be exactly the same as yesterday: a long entry just above the 1.6100 mark, targets at 1.6120 and 1.6160 and a stop below 1.6050.
FTSE 100
The FTSE 100 gave us back the losses from Monday as it broke below the 6,385 area and triggered our short entry before hitting our first target at the 6,335 points mark. The British index is hammered by the uncertainty in the US and we will adjust our trade for today looking for more profits. Our stops must be moved to the breakeven price of 6,385 and our next target at 6,250 might come into play, if not then at least we don’t have any money in risk with our stops firmly placed at the opening price of the trade.
Gold
Gold seems to be going nowhere for a second day as it’s moving aimlessly around the $1,320 mark. We remain confident in our trade, we have entered long just above the $1,325 level and our targets are at $1,339 at first and $1,362 eventually, our stops has been placed just below the $1,307 price level. Gold is in a state of hold as the US shutdown is making investors think twice any trades on the volatile yellow metal.
All charts have been created using FXCM’s Trading Station platform.
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