- 56% of all open positions are long
- The portion of orders to sell the British Pound increased from 52 to 61%.
- Notable demand area at 1.2888/1.2880
- A strong resistance cluster is around 1.3140
- Upcoming events: US Building Permits, US Housing Starts
Confidence among US homebuilders improved in the ninth month of the year, official data revealed on Monday.The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) jumped to 65 in September, the highest reading since October last year, whereas market analysts expected the Index to come in at 60 points. The August reading was revised down to 59 from the originally reported reading of 60. Any reading above 50 indicates an overall positive outlook. The Index was seen mostly at 58 points, rising to 61 in January. According to the report, current sales advanced to 71 in September from August's 65, the fastest pace in nearly nine years, whereas sales expectations in the next six months climbed to 71 from the preceding month's 64. In the meantime, buyer traffic rose to 48 from last month's 44 points, remaining below the 50-point level.
In regional terms, on a three-month moving average basis, homebuilder confidence in both the Northeast and South increased one point to 42 and 64 points, respectively, as well as it improved in the West to 73 from last month's 69 points. The Index found builder sentiment held steady at 55 in the Midwest.
US Building Permits and Housing Starts
Today attention should be paid to the US Building Permits and Housing Starts, due at 12:30 pm GMT. The Building Permits are released by the US Census Bureau and show the number of permits for new construction projects. It implies the movement of corporate investments (US economic development). It tends to cause some volatility to the USD. Normally, the more growing number of permits, the more positive (or bullish) for the USD. The Housing Starts, on the other hand, is an annualised number of new residential buildings that have already begun construction during the preceding month.
GBP/USD calms before the storm
Monday ended with the Sterling managing to remain above the 1.30 level against the US Dollar, however, more bullish momentum is likely to be very limited. A strong resistance is still located just over the 1.31 major level and no significant impetus for surge beyond that area is present today. Furthermore, ahead of the FOMC meeting on Wednesday no substantial movements are expected, with technical studies bolstering this view. Another relatively small rally is possible, with the 1.31 mark being the ceiling. In case the tide turns, the key support at 1.2885 is to remain out of reach.
Daily chart
The outlook remains unchanged, with the Cable likely to consolidate ahead of the FOMC meeting. The 1.3150 level is the upper border both today and tomorrow, represented by a two-week down-trend, also bolstered by the 200-hour SMA.
Hourly chart
Traders remain undecided
Market sentiment remains unchanged, with 56% of all open positions being long. The portion of orders to sell the British Pound, on the other hand, increased from 52 to 61%.
A different situation is observed elsewhere. For example, 63% of positions open at OANDA are currently long. This is more than the share of shorts (37%), sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 65% of traders being long and 35% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect no major changes
By the end of the next three months traders expect the Cable to be more or less at the same level where it is now. While the current price is 1.3230, the average forecast for December 20 is 1.318. Interestingly enough, however, the 1.32-1.34 interval is one of the least popular along with 1.38-1.40, having only 5% of the votes each. Most of the votes are concentrated in 1.28-1.30 (15%) and 1.36-1.38 (14%) intervals.