On Thursday Jan 30th
we highlighted the fact that Cable (GBPUSD)
was approaching a significant level in terms of resistance. This was the 200
period Simple Moving Average (SMA) on the monthly chart, which has consistently
provided a check to its rise since the dramatic days of the onset of the Global
Financial Crisis.
This time, it has turned out,
is no exception. The pair has fallen since then by the amount shown by the
circled arrow on the chart. It does not look like much, but here is the same
change in price on the four hour chart:
It can be seen here that, as
of yesterday, there is now a battle in progress at the support level of
1.83221, which has now turned into a resistance level, as is very often the
case.
The UK Construction
Purchasing Managers Index (PMI) came out with apparently stellar figures
yesterday. This initially caused a sharp reversal in the drop that was taking
place in the pair, but it was short lived. One swallow in the form of a good PMI
index, it would appear, at least as far as the market is concerned, does not
make a summer.
Aussie, Kiwi and Yen price action
The decision of the Reserve
Bank of Australia
to adopt a neutral stance on interest rates and to stop attempting to talk down
the Aussie unit resulted in a nice pop for both AUDUSD and AUDNZD. There is
reason to believe that these might be short lived, however, and overall
direction from here is far from clear. The move up by the Aussie against the
Kiwi, in particular, was totally reversed during the later part of yesterday’s
session. The New Zealand
unit is still suffering from a perception that it is an “emerging market
currency with a reliance on commodities”. This will probably continue until the
turmoil in emerging markets has abated.
The Yen (USDJPY) pair seemed
to be resuming its upward trajectory yesterday but is down again this morning.
It might be significant that it was sold off just after the start of the Tokyo session, which is
at 12 midnight GMT.
All will now depend on
payroll figures out of the USA
in the form of the Non Farm Payrolls on Friday, the precursor of which, the ADP
payroll numbers, are out later today. These were poorly correlated with the NFP
figures last month, so their value is limited.
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