- The share of sell orders inched up from 49 to 54%
- Traders' sentiment returned to its Monday's level of 71%
- Immediate resistance is at 1.2184
- The closest support is around 1.21
- Upcoming Events: US Retail and Core Retail Sales, US PPI and Core PPI, US Preliminary UoM Consumer Sentiment
The number of Americans filing for unemployment aid advanced less than expected last week, official figures showed on Thursday. According to the Labor Department, initial claims rose 10,000 to 247,000 during the week ending January 7. This marked the 97th consecutive week that claims remained below the 300,000 level, the longest streak since 1973. Thursday's report also showed that continuous claims dropped 29,000 to 2.09 million in the last week of 2016. Separately, the Labor Department reported that import prices climbed 0.4% in December, following the previous month's 0.2% decline. The increase was mainly driven by rising petroleum prices that jumped 7.9% during the reported period. On an annual basis, import prices increased 1.8%, the biggest rise since March 2012, after climbing 0.1% year-over-year in November.
Meanwhile, excluding petroleum, prices dropped 0.2% month-over-month in December, compared to the prior month's unchanged reading. The stronger US Dollar was the major reason behind the December decline. Over the last year, the Greenback appreciated greatly against the currencies of the US main trading partners, advancing 4.4%. Though it experienced the largest gains in the wake of Donald Trump's election. The major US stock markets ignored today's positive data, following Trump's disappointing press conference.
US Retail Sales and PPI are the main events today
Once again all focus turns to the US fundamentals. First of all, the US Retail Sales, which measure the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. The Core Retail Sales, however, exclude the automobile sector. Another important event will be the US PPI, as it measure the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation, while the Core reading excludes volatile products, such as food and energy, in order to capture an accurate calculation.
GBP/USD takes another shot at 1.22
The British currency managed to climb over the 1.23 mark for only a short period of time yesterday, ultimately sliding back down and closing trade below 1.22, thus, erasing all this week's gains. In spite of this decline, the Cable still refused to drop below the 1.2150 level, while volatility stretched even lower since Monday. Psychological support here remains strong is likely to cause the GBP/USD to rebound. Consequently, the Sterling has the potential to reclaim the 1.22 mark; however, this implies today's US fundamentals are to disappoint, as they are the main Cable drivers.
Daily chart
The Cable is still located within the borders of the broadening falling wedge pattern. Ultimately, an upside breakout is expected, although risks of a downside one are also present. At the time being the Pound appears to be gravitating towards the 200-hour SMA, with a retest of the down-trend in sight.
Hourly chart
Traders mostly bullish
Traders' sentiment returned to its Monday's level of 71%, down from 73% on Thursday. At the same time, the share of sell orders inched up again, namely from 49 to 54%.
A similar situation is observed elsewhere. For example, 67% of positions open at OANDA are currently long. This is more than the share of shorts (33%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 64% of traders being long and 36% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
By the end of the next three months traders expect the Cable to fall under the 1.24 major level, as 67% of survey participants believe so. While the current price is around 1.22, the average forecast for April 13 is 1.2204. However, the 1.20-1.22 interval is now the most popular one, having 17% of the votes, while on the second place is the 1.14-1.16 price range, with 15% of poll participants choosing it. Furthermore, the 1.18-1.20 interval was chosen by 13% of the voters.