The U.K. markets may be out but that doesn’t mean Cable won’t see volatility today!
Are you also seeing the break-and-retest opportunity on the 1-hour chart?
Before moving on, ICYMI, yesterday’s watchlist checked out USD/CAD’s downtrend ahead of the BOC’s monetary policy decision. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
BOC raises interest rates by 50 bps to 1.50% as expected
BOC: “interest rates will need to rise further,” with members “prepared to act more forcefully if needed”
U.S. ISM manufacturing PMI improved from 55.4 to 56.1 in May
API: U.S. crude oil inventories fall more than expected in the week ended May 27
Fed’s Bullard supports rate hike to 3.5% this year
Fed’s Beige Book reflects moderating economic growth and lower future growth expectations
AU retail sales up by another 0.9% to record highs in April
AU trade surplus widened from 9.74B AUD to 10.50B AUD in April vs. 9.3B AUD surplus expected
Dollar firms up on rising yields, inflation woes
China stocks close higher on stimulus measures
Switzerland’s inflation rate hits 2.9% y/y in May, higher than 2.6% expected and the fastest since September 2008
U.K. markets out on bank holiday
U.S. ADP report at 12:15 pm GMT
U.S. initial jobless claims at 12:30 pm GMT
U.S. factory orders at 2:00 pm GMT
U.S. EIA crude oil inventories at 3:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: GBP/USD
A last-minute selling ahead of the U.K.’s two-day holiday busted GBP/USD below a low-key descending channel yesterday.
Can the bulls bring Cable back to its established uptrend?
Asian and early European session traders are feeling risk-friendly today thanks to China loosening more of its restrictions and the U.S. printing a stronger-than-expected manufacturing report.
GBP/USD caught some of the good vibes as it broke above a tight consolidation at 1.2475 to trade closer to the 1.2550 in the last few hours.
I’ll be watching the 1.2575 level closely for signs of selling.
As you can see, 1.2575 sits near the 50% Fibonacci retracement of the last big downswing. More importantly, it lines up with the broken channel support from yesterday.
Escalating concerns between Russia and the U.S. (and its allies), or focus on the Fed’s balance sheet tightening beginning this month could inspire an anti-risk wave that would drag GBP/USD back below 1.2500.
If the risk-friendly theme extends to late European or U.S. trading sessions, though, or if Queen Elizabeth’s Platinum Jubilee celebrations inspire more GBP buying, then Cable could go back inside its short-term ascending channel.
Watch this setup closely, mates!