News that jobless claims rose more than expected has boosted the likes of GBP/USD and EUR/USD, while dollar-denominated gold and silver have extended their gains...
The dollar has fallen further in response to today’s mixed US data, causing
gold to extend its rally, while the likes of the EUR/USD and GBP/USD have managed to rebound. US index futures barely reacted, as stock investors remain optimistic that the re-openings and vast stimulus packages announced by central banks and governments will outweigh fresh US-China tensions.
Summary of today’s US macro data releases:
- Prelim GDP -5.0% q/q vs. -4.8% expected and last
- Core Durable Goods Orders -7.4% m/m vs. -14.8% expected
- Unemployment Claims 2.12 million vs. 2.10m expected
- Continuing jobless claims 21.05 million vs. 25.07 previously, and better than 25.75m expected
Coming up: Pending home sales and US oil inventories
Up next is Pending Home Sales at 15:00 BST and then EIA crude oil inventories at 16:00 BST. Analysts expect pending sales to have fallen 15% m/m compared to a drop of 20.8% in the prior month. Oil inventories are seen falling by 2.5m barrels last week following a larger-than-expected 5.0m decline the prior week. However, last night the American Petroleum Institute (API) reported crude inventories rose sharply, up for the first time in three weeks. Therefore, oil investors will be watching whether the official estimate will be more or less than the 8.73 million barrels build the API reported last night.
GBP/USD bottoming out?
As we have discussed
previously, the cable continues to show bullish characteristics despite the stream of negative Brexit news. The GBP/USD has been carving out short-term higher low as this 4-hou chart shows:
Source: ThinkMarkets and TradingView
With rates above the 1.2280 short-term resistance, the cable could be heading to test liquidity above his week’s earlier highs of 1.2363 next. Thereafter, the 61.8% Fibonacci retracement at 1.2427 could be the next bullish objective, ahead of the psychologically-important 1.25 handle next.
So the path of least resistance is to the upside for GBP/USD and it will remain that way until and unless rates break the bullish trend line and key support circa 1.2200.
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