By Fast Brokers – The Cable has bounced off of our 3rd tier uptrend line after experiencing a large leg down during the Asia trading session. The Cable finally participated in the broad-based Dollar strength taking place over the last couple days after pricing data from China printed hotter than anticipated. The rise in China’s CPI and PPI indicates there could be further tightening down the road since the government doesn’t want the economy to overheat. Tighter liquidity in China could have a noticeable impact on the performance of the global economy since China has been an engine driving the recovery from the nadir of the recession. In addition to the news from China, the UK released M4 Money Supply data which was shockingly low (-1.1%). This is the largest decline in the money supply since the beginning of the recession and could have placed further downward pressure on the Cable today. Meanwhile, investors are awaiting the Philly Index from the U.S. followed by Obama’s proposal for new financial regulation. Should the Philly print weak and investors take Obama’s proposal as a negative for the U.S. economy, we could witness further weakness in the Dollar as confidence surrounding America’s recovery wanes. Speaking of which, the primary reason behind the Greenback’s weakness over the past hour or so is the much higher than expected weekly Unemployment Claims figure. Higher unemployment could discourage the Fed from tightening liquidity any time soon, a Dollar negative. The UK will release Retail Sales tomorrow and investors are expecting growth of 1.3%, which would be the largest growth rate since January of this year.
Technically speaking, as we mentioned the Cable has held up very well considering the plight of the EUR/USD. The Cable has held strong above our 4th tier uptrend line and still has multiple uptrend lines serving as technical cushions along with 1/15 and 1/13 lows. As for the topside, the Cable faces multiple downtrend lines along with 1/15 and 1/19 highs. Furthermore, the psychological 1.645 area could prove to be a technical barrier should it be tested.
Present Price: 1.6315
Supports: 1.6262, 1.6238, 1.6214, 1.6184, 1.6161, 1.6137
Resistances: 1.6303, 1.6318, 1.6340, 1.6360, 1.6379, 1.6407
Psychological: 1.60, 1.65, January highs and lows
Market Commentary provided by Fast Brokers.
Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
