Who’s up for a dollar-related setup today?
If you are, then you won’t want to miss GBP/USD’s potential inflection points in the 15-minute charts!
Before moving on, ICYMI, yesterday’s watchlist looked at AUD/CAD’s short-term inflection point after the RBA’s meeting minutes and before Canada’s CPI release. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. Preliminary Building Permits for August: 1.54M (1.43M forecast; 1.44M previous)
Canada CPI for August: 4.0% y/y (3.9% y/y forecast; 3.3% y/y previous); Core CPI at 3.3% y/y (3.5% y/y forecast; 3.2% y/y previous)
New Zealand’s dairy auction prices rose for the second successive auction. Both overall prices and key whole milk powder (WMP) prices jumped by 4.6% (vs. 2.7% previous)
New Zealand’s current account deficit shrank from 4.66B NZD to 4.21B NZD in Q2, marking its second consecutive quarterly decrease
Japan’s trade deficit trimmed from 0.60T JPY to 0.56T JPY in August as the decline in imports (-17.8% y/y) outpaced the decline in exports (-0.8% y/y)
Westpac-Melbourne Institute Leading Index slightly improved from -0.56% in July to -0.50% in August; negative prints suggest that “the economy is likely to grow at a below-trend pace”
As expected, the PBOC kept its benchmark lending rates unchanged in September. The one-year LPR is kept at 3.45% while the five-year LPR is still at 4.20%
Germany’s producer prices gained by 0.3% (-12.6% y/y) in August and marked the fastest annual decline since the records started in 1949
U.K.’s inflation surprisingly weakened in August, with the annual headline CPI rising by 6.7% (vs. 7.0% expected, 6.8% previous) and core CPI gaining by 6.2% (vs. 6.8% expected, 6.9% previous) led by decelerations in food prices
U.K.’s producer input prices fell by 2.3% ytd/y in August (vs. -3.2% in July) while output/factory gate prices dipped by 0.4% ytd/y (vs. -0.7% in July)
Price Action News
With the PBOC sticking to expectations and leaving its Loan Prime Rates (LPR) unchanged, the commodity-related currencies didn’t see much volatility during the Asian session.
Instead, most of the action was focused on GBP after the U.K. dropped its August CPI numbers. Both headline and core CPI came in weaker than expected and supported a less hawkish path for the Bank of England (BOE).
GBP fell against its major counterparts but has also seen a bit of retracement, especially against counterparts like USD, JPY, CHF, and EUR.
U.K.’s house price index at 8:30 am GMT
Australia’s CB leading index at 2:30 pm GMT
U.S. crude oil inventories at 2:30 pm GMT
FOMC statement at 6:00 pm GMT
FOMC presser at 6:30 pm GMT
New Zealand quarterly GDP at 10:45 pm GMT
RBA’s bulletin at 1:30 am GMT (Sept 21)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
If you’ve been watching GBP pairs after the U.K. CPI release, then you’ll know that the British pound dropped like it was AAPL stocks after the iPhone 15 reveal.
GBP fell against its major counterparts with GBP/USD falling all the way to the S2 (1.2340) Pivot Point level.
GBP/USD has seen some buying since then, however, and now the pair is trading closer to the S1 (1.2370) inflection point.
In fact, it’s not too far from the 1.2375 area that had served as support earlier this week.
Will GBP/USD have a chance to recoup its losses?
The Fed is scheduled to share its September monetary policies. Aside from its interest rates, the central bank will also release new economic and dot plot projections. Chairman Powell will also conduct a presser 30 minutes after the FOMC statements.
Traders will be on the lookout for clues that the Fed won’t trigger the one other interest rate hike that members had penciled in back in June.
If the markets see a “dovish hike” from the Fed, then the U.S. dollar may see selling pressure enough to push GBP/USD to the areas of interest that we’re watching.
But if the Fed members convince traders that we’re in for a high-interest rate environment for longer than expected, then we may see risk aversion that could extend GBP/USD’s intraweek losses.
Keep close tabs on these potential inflection points if you’re planning on trading GBP/USD in the next trading sessions!