The lingering impact of Mark Carney’s inability to provide a concise timeframe on a UK rate rise has punished the Sterling this week. This single currency continues to face headwinds from the Bank of England’s clear reluctance to raise UK interest rates and this has encouraged sellers to depreciate the GBP further.Even though economic data from the UK has picked up in November, the non-existent rise in inflation has contributed to UK interest rate expectations being pushed back further. If the second estimate of the UK’s Q3 GDP points towards slowing economic growth, there is going to be further potential for the Pound to face losses.
Wednesday’s hefty profit taking in WTI Oil came to a halt yesterday with further gains capped at the $43.30 dynamic resistance. The effects of the unexpected comments from Saudi Arabia earlier in the week regarding its willingness to cooperate to achieve stable prices may have fizzled out, as sellers have reappeared. It seems that the reoccurring theme of an excessive oversupply in the markets will continue to weigh heavily on investor sentiment, leaving this commodity fundamentally bearish with doors wide open for a further decline towards $39.
Apart from theawaited UK GDP report, the economic data calendar is relatively light today and this may lead to a price action driven trading session. Focusing on the new month of December, spotlight will likely be directed back towards China as there will be a barrage of economic data releases on the 1st of December from world’s second largest economy, which should offer more perspective on its economic growth.
Currency Spotlight – USDJPY
The increasing likelihood of the Fed raising US interest rates in the December meeting has encouraged bullish investors to propel the USDJPY to 3 month highs of 123.75. Previous resistance at 121.70 may act as a dynamic support which should provide the foundation for bulls to regain momentum. This pair remains technically bullish and the current correction may offer an opportunity for investors to send prices towards the psychological 125.00 resistance. Technical indicators such as the MACD and moving averages also marry this bullish view on the USDJPY.
WTI oil is technical and fundamentally bearish on the daily timeframe. Prices have found some resistance below the $43.30 and this may offer an opportunity for sellers to drag prices lower. The candlesticks are trading below the daily 20 SMA and the MACD has also crossed to the downside. There may be a decline towards the psychological $40 support.
The FTSE100 resides in a very wide range with support at 6215 and resistance at 6450. Technically prices are pointing up and will likely trade towards 6450. Prices are trading above the daily 20 SMA and the MACD has also pointed to the upside.
This pair is technically bullish on the daily timeframe on the daily timeframe. There have been consistent higher highs and higher lows with prices finding some support above the daily 20 SMA. A breakout above 1.1100 may invite an opportunity for prices to trade towards 1.1350.