- The share of sell orders increased to 60% from 59%
- 61% of traders have a positive outlook towards the British currency
- Immediate resistance is around 1.2320
- The closest support is at 1.2250
- Upcoming Events: Merry Christmas to everyone once more!
New orders for US-made capital goods advanced more than expected in November due to strong demand for machinery and primary metals, suggesting some of the oil-related drag on manufacturing was starting to fade. According to the Commerce Department non-defense capital goods orders excluding aircraft, a went up 0.9% after an unrevised 0.2% gain in October. Moreover, there were increases in orders for electrical equipment, appliances and components, as well as computers and electronic products. A drop in oil prices last year, together with a surge in the dollar, pressured manufacturing. Much of the impact has been through weak business spending on equipment, which has contracted for four consecutive quarters. However, with oil prices hovering above $50 per barrel, manufacturing, which accounts for 12% of the US economy, is starting to perk up. In the meantime, the US economy soared at a faster pace last quarter than previously estimated, but the stronger gains only help bring the year's growth rate back in line with the long, sluggish expansion. According to the Commerce Department the US GDP expanded at an inflation- and seasonally adjusted annual rate of 3.5% in the third quarter.
Existing home sales in the United States rose for the third consecutive month in November, surprising markets and hitting their highest level for almost a decade. According to the National Association of Realtors, home resales advanced 0.7% to an annualized rate of 5.61 million units in the reported period, following October's downwardly revised rate of 5.57 million, surpassing analysts' expectations for a slight decline of 1.0% to a 5.52 million-unit pace and reaching the highest since February 2007. On an annual basis, sales increased 15.4% in November. According to the latest data published by Freddie Mac, the fixed 30- year mortgage rate has climbed around 60% to an average rate of 4.16% since Donald Trump's victory in the US presidential election. Moreover, mortgage rates are likely to go even higher after the Fed rose its key interest rate to 0.75% from 0.50% last week as well projected three more hikes in 2017. Separately, the Energy Information Administration announced on Wednesday a 2.3 million barrel increase in US crude oil inventories during the week ending December 16, while market analysts anticipated a decline of 2.4 million barrels, following the preceding week's 2.6 million barrel slip.
Everyone is on holiday
There are no data releases planned in the markets. The only exception are the Japanese, who released a batch of data at 11:30 GMT.
GBP/USD remains below 1.23 level
The Pound continued to trade below the 1.23 mark against the US Dollar on Monday. Previously the currency exchange rate slightly surged during Friday's trading session. However, the surge was the result of a rebound from the combined support of the lower Bollinger band and the monthly S1, which both were located near the 1.2250 level. It is most likely that the rate will continue on its way downward, as there is active a rather strong descending channel.
Daily chart
The hourly chart shows a beautiful rebound against the combined support of the lower Bollinger band, monthly S1 and the lower trend line of a descending channel near the 1.2350 mark. At the moment the pair is in a rebound to the channel's resistance. However, it is being hindered by the 55-hour SMA.
Hourly chart
Traders mostly bullish
SWFX traders have decreased their bullish outlook, as 61% of open positions were long on Monday, compared to 65% on Friday. Meanwhile, 54% of trader set up orders were to sell the Sterling.
A similar situation is observed elsewhere. For example, 61% of positions open at OANDA are currently long. This is more than the share of shorts (39%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 65% of traders being long and 35% shorting 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 higher than the level where it is now. While the current price is around 1.24, the average forecast for March 26 is around 1.26. Furthermore, the 1.16-1.18 interval is now the most popular one, having 15% of the votes.