Global Markets
Although the BoE left interest rates unchanged at 0.5% for the 78th consecutive month, the GBP has encountered aggressive appreciation across the FX markets. Bullish sentiment for the GBP seems to have been reimbursed following the MPC statement explicitly stating that the recent global events have not altered the Bank of England’s central view. Investor concerns about the exposure of the UK economy following the recent global events have been reduced and this should improve sentiment towards the GBP moving forward. Even though the prospects of a UK rate hike anytime soon are weak, the UK data overall is looking robust on a continual basis and there is still optimism that it should be a matter of when, rather than if a rate hike happens in 2016. As of writing the GBPUSD has surged to a new monthly high of 1.5448 on the daily timeframe and currently journeys towards the daily 20 SMA around 1.5470.
Whilst the GBP moves in aggression, the EUR has gently appreciated against the USD as the lingering effects induced by a dovish Draghi last week slowly wear off the minds of investors. The news that both German imports and exports hit record highs in July has helped the sentiment towards the EU economy. This data suggested that foreign appetite for goods from Europe’s largest economy is still sturdy despite the developments in China. Revised GDP q/q also exceeded expectations at 0.4%. The single currency is currently battling the 200 SMA on the daily timeframe and it looks like the single currency is waiting for something bigger to jump above. The next major focus for the EUR will be the German ZEW economy sentiment next week which may shed more light on the German economy.
EURTRY
The EURTRY is bullish on the daily timeframe. The previous resistance at 3.3400 may act as support. A breakout above the 3.4200 resistance may open a path to the next relevant resistance at 3.4800. The MACD trades to the upside and prices are above the daily 20 SMA. A move back below 3.2600 invalidates this bullish outlook.
GBPNZD
The overnight interest rate cut of a further 0.25bp from the RBNZ and the downside economic pressure due to the events in China has granted a bearish sentiment for the NZD. The GBPNZD is technically bullish on the daily timeframe. Prices are trading below the 2.4500 resistance. A solid breach and daily close above this level may open a path to the next relevant resistance at 2.570.
NZDCAD
The NZDCAD is technically bearish on the daily timeframe. Prices have breached the light support at 0.8350 and may continue to decline to the next relevant support at 0.8100. The MACD trades to the downside and prices are below the 20 SMA. Today’s daily candle is forming to be a shooting star, which suggests of a potential for a further decline. A move back above 0.8600 invalidates this daily bearish outlook.
USDMXN
The USD appreciation can be seen clearly on the USDMXN. This pair is technically bullish on the daily timeframe. Prices are currently in a mini range with support at 16.700 and resistance at 17.000. A breakout above 17.000 may pave a path to the next relevant resistance at 17.200, whilst a breakdown below 16.700 may expose the next relevant support at 16.350.