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Buying GBP on Dips – Forex Trading Tips
Today we still like buying GBP on dips particularly against the JPY. The 193.00 handle on the GBPJPY offers a nice confluence zone with previous price support, the 50% retrace of the rally from 192.27 to 193.98, and the figure.
We also like a selling rallies on the EURNZD after a nice rally and subsequent rejection from solid resistance at the 1.6600 figure, R1 pivot, and yesterday’s high. While we are still bearish overall the Kiwi medium term, we feel RBNZ’s more conservative rate reduction along with the less dovish than expected statement could offer some short term strength for the NZD.
Current Market Sentiment:
During yesterday’s NY trading the USD traded without much direction as it rallied through the first half of the session but pared those gains into the close. While we did see existing home sales come in very strong for June, up 3.2 percent to a higher-than-expected annual rate of 5.49 million which is the best since the bubble days of 2007, the rest of the US economic calendar was once again on the light side.
The RBNZ cut it’s benchmark interest rate for the second time in six weeks. The 25 bp cut was widely expected by the market with a small percentage of analysts even looking for a larger 50 bp reduction. With some speculation of a larger cut and the 25 bp cut already priced in, we saw the NZD advance immediately upon release of the decision to reduce the rate to 3%. The Kiwi has continued to hold it’s gains through Asia even with further cuts expected from the RBNZ largely due to the fact that many feel that the statement was not dovish enough, particularly in regards to the exchange rate.
In Gov. Wheeler’s statement he said that “at this point some further easing would be required”, which many analyst are expecting as soon as the next meeting in early September.
Today’s upcoming risk events include Retails Sales data from the UK and Canada followed by weekly Jobless claims from the US (find out more about today’s risk events here).
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