It was a tough day for the UK economy as it recorded further weak economic data as the unemployment rate remained flat at 5.1%. This sent pound traders into a spin as many viewed this stalling of the economy as the first warning sign that the global slowdown is having an effect on developed economies. We have previously seen the unemployment rate slow down, and today was one of those days but markets reacted negatively, even as the claimant count change was -14.8K and seemed relatively upbeat compared to market expectations.
On the charts this has led to a large sell off in the GBPUSD as it slid further down the charts breaking the bullish trend which had managed to sustain itself over the last week. With the failure of support at 1.4395 the market is now aiming for lower lows and the next level down is likely to be at 1.4082 as the market seeks to rush down on the back of weak economic data from the UK economy and a strengthening USD. The key thing to also note here is the 50 day moving average which has proved its resilience against any upward movements on the charts, and looking at it now, it's unlikely to be truly tested for some time again.
The USDCAD has also been a major mover on the charts and the markets are looking every increasingly at this pair as the correlation between it and oil markets continues to be a major driver on the charts. As a market watcher this correlation has to crack at some point as right now the Canadian economies reliance on oil is starting to wane heavily, and in the future it is unlikely to have to major an impact. However, the upcoming retails sales and inflation figures will paint a much better picture and many are now expecting a mixed bag when it comes to the market for the Canadian economy.
Chart wise the USDCAD has been in a state of constant volatility as the correlation between oil and the CAD continues to be a major playing point for traders. So far support at 1.3633 has managed to hold back the Canadian dollar as it looks to gain back some of the ground it has lost over the previous months. They key here for traders is the 20 day moving average which has so far shepherd the USDCAD lower on the charts, and many will be looking to see if this can be broken with a push higher, which would signal the bulls taking charge again on the charts. Obviously the key mover here will also be oil markets which many are expecting to take charge again when the correlation kicks in and drives the market heavily - but they days of this may be numbered in the short to medium term.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.