- The share of buy orders declined from 72 to 56%
- 54% of all open positions are long
- Key demand area is at 1.2891/1.2879
- The closest resistance is at 1.3001
- Upcoming events: US Markit Services PMI, US CB Consumer Confidence, FOMC Member Fischer Speech
The number of Americans filing for unemployment benefits fell sharply last week, official figures revealed on Thursday. According to the US Department of Labor, initial claims for jobless benefits dropped 8,000 to a seasonally adjusted rate of 252,000 in the week ended September 16, touching the lowest level since mid-July. Meanwhile, market analysts expected initial jobless claims to rise to 261,000 last week from the preceding week's 260,000. Filings for US unemployment benefits remained below the 300,000 level for the 81st consecutive week, the longest streak since 1973. The four-week moving average of initial claims, considered a better measure of labor market trends, declined 2,250 to 258,500 last week. The US Dollar Index, which measures its strength against a trade-weighted basket of six major currencies, fell 0.45% to 95.03, the lowest level since September 12, despite upbeat data.
Other data released by the National Association of Realtors (NAR) showed sales of previously owned US homes unexpectedly declined to a seasonally adjusted annual rate of 5.33 million units in August, following the previous month's 5.38 million unit pace and falling behind the 5.45 million unit rate market forecast. The drop was mainly driven by a shortage of properties for sale as it lifted home prices higher.
US Services PMI and the CB Consumer Confidence
Tuesday is also rather quiet in terms of fundamental data, having only to relevant events to influence the GBP/USD pair's performance, namely the US Markit Services PMI and the CB Consumer Confidence. The Services PMI captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic condition in the US. A result above 50 signals is bullish for the USD, whereas a result below 50 is seen as bearish. The CB Consumer Confidence captures the level of confidence that individuals have in economic activity. A high level of consumer confidence stimulates economic expansion, while a low level drives to economic downturn. Generally, a high reading is also positive for the USD, while a low reading is negative
GBP/USD remains below 1.30
Monday ended with the Cable remaining relatively unchanged, amid a weaker US Dollar, mainly due to yesterday's US political debates. Nevertheless, there is no event that could help the Sterling recover from intraday losses today, thus, we should see another leg down, as technical indicators suggest. The key support, preventing the pair from falling to Brexit lows, is still the cluster around 1.2880, represented by the Bollinger band, the weekly and the monthly S1s. At the same time, the weekly PP is keeping the GBP/USD pair from climbing back over the 1.30 major level, being the closest resistance.
Daily chart
The Cable keeps trading within the borders of the descending channel pattern, but unable to reclaim the 1.30 level for now. A successful attempt would require more impetus, as the 200-hour SMA and the channel's resistance line are close by; thus, a breakout could occur as early as Wednesday. According to technical studies, however, the pair is to bounce back from the resistance line and continue edging lower.
Hourly chart
Traders remain undecided
Bulls lost some numbers over the day, as 54% of all open positions are now long (previously 58%). The share of buy orders also declined, namely from 72 to 56%.
A different situation is observed elsewhere. For example, 73% of positions open at OANDA are currently long. This is more than the share of shorts (27%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 70% of traders being long and 30% 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 around 1.30, the average forecast for December 27 is 1.3169. Interestingly enough, however, the 1.30-1.32 interval is not the most popular one, having only 11% of the votes. Most of the votes are concentrated in 1.28-1.30 (17%) intervals. Furthermore, 54% all survey participants believe the Cable is to remain above 1.30.