GBPUSD spent some time below my initial support zones 1.7060 – 70… one might say it followed where EURUSD had gone before. This doesn’t have an impulsive feel to it though. And it would be difficult to find a justification for big moves right now. At the end of the week GDP numbers should help Mr Cameron celebrate his policies of fiscal austerity with UK GDP finally exceeding pre-crisis levels. Nicely done! But as they say.. better to be lucky than good. In any case GBPUSD has been indecisive for the last couple of days, and hovers just above said levels. Perhaps anticipation of good numbers could yet see cable bounce from here. July has looked like a consolidation period with trend continuation most likely. A move above 1.7225 could see stops being taken out.
Other currency pairs continue to give mixed signals with USDJPY hovering around support while USDZAR and other emerging market pairs have moved quite a bit lower in recent sessions. I would only consider USDZAR interesting if we move through the June lows though, we seem to be in a complex that in all likelihood is a large corrective pattern.
I don’t see currency markets as leadership candidates at the moment. Fixed income and equities have more interesting stories to tell, but as I’ve said many times, summer months tend not to be so exciting. In a previous blog, I pointed out a slight discrepancy in the technical’s for the Dow versus the S&P with the latter going below trend support, well it turns out that was only temporary. We saw a fairly aggressive bounce back above supports, so we can only conclude we’re still in trend with confirmation of generally bullish markets.
Some decent macro later in the week could help the market gain some clarity, but I wouldn’t hold your breath. Durable goods in the US, the aforementioned GDP numbers in the UK are just some of the nuggets that will help us all make some sense of the macro-scope. But these are lazy summer months, it probably takes more than that to get the juices flowing. For now we’ll continue to watch the levels and note any interesting price action