Super Thursday? More like super let down at the end of the day as the UK economic board that was expected to be hawkish was quite moderate for the most part. With the drop in energy prices in the global economy it has so far led to inflation remaining fairly weak in the UK economy, with top economists now expecting it to return to normal in mid 2016. Now for many this is some time off, but Carney took his chance to say that interest rates were a reality and they were coming. Which is fine for the most part, but not really a reality if you're struggling with inflation.
The market response was as expected, the pound fell within minutes of all of this and has remained rather downbeat for the most of the day against the USD. The previous pennant pattern that had formed has broken down on the charts, and we could see the bears return to claw some meat out of the GBPUSD. Support is likely to be found at 1.5354 on the charts, and we could see some strong plays of this level as it has been quite active in previous moves.
Oil finally touched the support level at 44.33 I had been talking about, as the USD strengthened giving no room for bulls in the market. This level is looking very strong and I am anticipating a weak bullish movement in the short term before the reality of a resumption in selling as the Iran deal goes through the hopes in Congress. On top of this the current price range does offer some support for shale in the medium term, but over the long term it could certainly see some strong die-offs in the American market.
The Australian dollar felt the pinch overnight as despite the better than expected employment report which showed the economy creating 38.5k jobs in the market. Despite this though the unemployment rate jumped sharply to 6.3% from 6.0%, a very large jump! Now many in the market were caught not expecting this and it does show on the charts as we saw wild volatility in the swings of the economy.
Now on the charts the AUDUSD has been looking strong and we have seen strong support build up around 0.7304, and I feel that at present we are going to see the AUDUSD track back down the charts. It may have held up today but it is contained and the fundamental side of me and technical side of me are feeling very bearish at present. I don't see resistance at 0.7423 being pierced anytime soon.
It's easy to look at the Australian dollar and think it's not far off pulling back, but with the commodity markets in chaos and constantly reporting dips, Australia is going to come of second best in the long run.
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