What happened in Asia and Europe
Despite risk aversion/appetite movements, despite falling rising stocks and despite good and bad fundamental data, majors remain trapped in previous three month ranges. Except maybe Japanese yen that looks a bit stronger, yet also approaching to strong midterm support level, still market has not found a way out.
Uncertainty continues ruling forex market, yet from early Asia, a general decline in equity markets helped dollar and mostly yen to post gains against major rivals.
In the U.K., construction activity fell at its slowest pace in 18 months in August after the construction PMI index rose to 47.7 in August from 47.0 in July, giving Pound some aims to recover the 1.6200 level. Euro also regained some ground and test the 1.4250 level, but failed to break above, and fall down to the 1.4200 area.
In the U.S., nonfarm private employment decreased 298,000 from July to August 2009 on a seasonally adjusted basis, according to the ADP National Employment Report. The estimated change of employment from June to July was revised by 11,000, from a decline of 371,000 to a decline of 360,000. Despite this August employment decline was the smallest since September of 2008, the report triggered a risk aversion rally, sending stocks to the downside, with dollar and yen quickly following to the upside. USD/JPY reached a fresh 7 weeks low and remains clearly bearish, aiming for a retest of the key 91.70 midterm support zone.
What to expect
Since Wall Street opening, currencies are just following stocks moving accordingly to DJIA and S&P in the short term. S&P remains under 1000, yet struggling to regain the level, while DJIA is just above 9300 level. No range, any support or resistance level broken, except in Japanese yen crosses that remain pretty bearish, we have FOMC Minutes in a couple of hours. But at this point, seems unlikely the statement could wake up this sideways market.
Gbp/Usd Outlook
Slightly bullish today, pair still looks bearish in the daily chart: capped by a descendant trend line, and with 20 SMA well above current price and turning bearish; current rally has been halted for now, by the strong 1.6250 area after pair rebound from the 1.6110 lows. Immediate resistance above mentioned 1.6250 comes at the 1.6320 area, where we have the trend line, ahead of stronger 1.6375/80 highs. Supports from here, lie at 1.6520, 1.6160 and 1.6110.
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