After what appeared to be another weak week for the USD, the greenback managed to recover some of its earlier losses. Beginning with yesterday’s minutes which hinted at a possible disagreements especially on matters inflation, the USD managed to remain steady and given this new focus on inflation related data, today’s PPI was something worthy.
Well, against expectation, both headline and core producer prices managed to expand by 0.4%. At the same time, the number of people claiming benefits dipped to 243K. what now remains is tomorrows US CPI and should it jerk higher, be assured that the USD should rally as it will be a sign of optimism for the US economy which officials are unsure of.
As we have seen earlier that labor related data and inflation are sensitive, the Feds take both into consideration and now that there will be another 3rd rate hike is on December, positive releases should spur USD bulls.
As a USD bull, I’m also a GBP bear. GBP slid further today and considering how commodity dollars-AUD and NZD gained after news of inflation uncertainty, investors rushed to buy high yielding currencies.
Generally, political sways and Brexit negotiations will take center stage and as long as there is no progress or deals, the GBP should suffer.
Technically, there is a bearish engulfing pattern in the daily chart with clear sell pressure in the weekly chart. Price action has failed to breach and close above 1.88. In fact zooming out to the daily chart and chartists can notice a triple top with 11.10.2017 closing as a doji.
Today’s bear candlestick completed a morning star pattern and all this was accompanied by reducing bull momentum.
Because of this likely break out from the squeeze happening at the overbought territory in the weekly chart, I’m looking to buy the Kiwi and trade as follows:
Sell Limit: 1.848-1.850
Stop Loss: 1.87
Take Profit: 1.8
Have a good trading day.