(Slobodan Drvenica – Windsor Brokers)
Cable maintains negative tone and attacks 1.20 support in early Thursday following short-lived recovery attempts.
Pound came under fresh pressure after higher than expected July inflation (10.1% vs 9.8% f/c; the highest since 1982) that suggests the BOE is likely to opt for another 0.5% rate hike to fight soaring prices. Continued strong policy tightening would negatively impact Britain’s economic growth that would prompt further selling of pound.
Daily technical studies show rising negative momentum and moving averages in bearish setup, with near-term action being pressured and capped by the base of falling and thickening daily Ichimoku cloud, although headwinds from key 1.20 support zone (Fibo 38.2% of 1.1760/1.2293/daily Kijun-sen at 1.2026 and psychological 1.20 support) persist and may keep the action in extended consolidation before bears resume.
Upticks should be capped by the cloud base (1.2097) to keep bears intact and offer better selling opportunities, while only sustained break above daily Tenkan-sen (1.2135) would put bears on hold.
Eventual clear break of 1.20 pivot would signal bearish continuation on completion of failure swing pattern on daily chart and expose targets at 1.1963 (Fibo 61.8%) and 1.1916/1.1890 (July 22/21 spike lows).
Res: 1.2059; 1.2097; 1.2135; 1.2167.
Sup: 1.2000; 1.1963; 1.1916; 1.1890.
Fed doesn’t rely on softer oil as it could jump anytime [Video]
(Ipek Ozkardeskaya – Swissquote Bank Ltd)
The equity rally in the US didn’t pick up momentum after the Federal Reserve (Fed) released its latest meeting minutes, which sounded more hawkish-than-expected, or more hawkish-than-what-was-needed-to-give-another-boost to the US stock markets.
The biggest take was that the Fed will continue tightening its policy until it sees that inflation is ‘firmly on path back to 2%’. The S&P500 fell 0.72% as Nasdaq gave back 1.20%, although the jump in the US 2-year yield was relatively soft, and the Fed funds futures scaled back the expectation of a 75 bp hike in the next meeting.
Crude price completed an ABCD pattern, and it is more likely than not we see the price rebound to the $100 level in the medium run.
In China, Tencent announced its first ever revenue drop as government crackdown continued taking a toll on its sales, and the pound couldn’t gain even after the above 10% inflation data boosted the Bank of England (BoE) hawks and the call fall steeper rate hikes to tame inflation in the UK.