- The portion of orders to sell the Pound takes 51% of the market
- Market sentiment reached a perfect equilibrium
- Immediate resistance is around 1.2610
- The closest support is around 1.2490
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Upcoming events: US Building Permits, US Housing Starts, US Capacity Utilization Rate, US Industrial Production
Manufacturing activity in the New York State fell markedly in April, raising concerns over economic growth in the Q2 of 2017, a survey revealed on Monday. The New York Federal Reserve reported that its Empire State Manufacturing Index came in at 5.2 for April, following the preceding month's reading of 16.4. Meanwhile, market analysts anticipated a slight drop to 15.2 points during the reported month. Data showed that 35% of the survey respondents said that business conditions had improved, while 30% claimed that they has worsened over the reported month. The New Orders Index plunged 14 points to 7.0, while the Unfilled Orders Index rose slightly to 12.4. On the positive side, the Employment Index jumped to its two-year high of 13.9 points in April, confirming the view that the US labour market is at or near full employment. The survey respondents also pointed to modestly rising input prices and increasing working hours. The respondents also expressed optimism of the long-term prospects of the US economy, with the Future Situation Index rising three points to 39.9 and the Future New Orders and Shipments Indexes decreasing slightly.
Moreover, both Future Capital Expenditures and Future Technology Spending Indexes surged to 27.7 and 15.3 points, respectively.
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Second-class US data due today
Tuesday brings some US fundamental data, such as the Building Permits. They show the number of permits for new construction projects. It implies the movement of corporate investment and tends to cause some volatility to the USD. Another data release will be the Industrial Production. It shows the volume of production of US industries, such as factories and manufacturing. Up-trend is regarded as inflationary, which may anticipate interest rates to rise. Finally, the Capacity Utilization Rate. It is the percentage of the US production capacity which is actually used over the short-time period. It is indicating of overall growth and demand in the US economy. A high capacity utilization stimulates inflationary pressures.
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GBP/USD keeps climbing up
Monday ended with the British Pound outperforming the US Dollar, which resulted in the six-month bearish trend-line getting pierced. The Cable, however, now faces another strong resistance, namely the cluster around 1.2610, represented by the upper Bollinger band, the weekly R1 and the 200-day SMA. Technical indicators keep pointing to another potential rally today, in which case the Sterling would have the opportunity to reclaim 1.26. Nevertheless, there is no impetus present that could help the GBP/USD pair overcome the 200-day SMA at 1.2626, not yet at least.
Daily chart
The Cable continued to climb higher on Monday, with the exchange rate bouncing back from the trend-line. However, a spark of bearish momentum from the 1.26 mark could break the up-trend and cause the 1.25 mark to be put to the test again, with the 200-hour SMA acting as an additional support around that area.Hourly chart
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Traders mostly bullish
Market sentiment reached a perfect equilibrium today, but the portion of orders to sell the Pound remained unchanged, still taking up 51% of the market.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, but there are still not that many more bears than bulls, namely 55% of all open positions are short and the remaining 45% are long. Meanwhile, sentiment at Saxo Bank worsened over the day, with 51% of traders now being short and the other 49% being long the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
© Dukascopy Bank SABy the end of the next three months traders believe the Cable is to rise above the 1.26 major level, as 52% of survey participants believe so. While the current price is around 1.26, the average forecast for July 18 is 1.2543. The 1.18-1.20 and the 1.28-1.30 ranges are now the most popular price intervals, both having 15% of the votes, while on the second place are the 1.20-1.22 and the 1.26-1.28 price ranges, with 13% of poll participants choosing each of them. Furthermore, the 1.30-1.32 interval was selected by 11% of the voters.