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BK Big Trades – GBP/USD and USD/JPY Orders Canceled
BK Big Trades -- GBP/USD and USD/JPY
We’ve got 3 new Big Trade Orders to start the week:
Place Order to Sell 1 Lot GBP/USD at 1.4630
Place Order to Sell 1 More at 1.4850
Stop for ALL at 1.5015
Considering that Chinese stocks dropped more than 5% overnight to close at their lows, today’s recovery in currencies amounts to nothing more than a relief rally. There are no major economic reports released today, so the moves are not driven by data. The U.S. reported very strong job growth on Friday but market sentiment was hit hard by the stagnation in wages. Taking a look at this week’s upcoming economic reports -- the GBP, USD and risk appetite are in play. The China story is not over and we are particularly bearish GBP because prior to the market volatility, the BoE was reluctant to raise interest rates. After the large swings in the market last week, the central bank could grow even less hawkish or more dovish. U.K. data has been mostly softer and we are also looking for tomorrow’s industrial production report to surprise to the downside.
Place Order to Sell 1 Lot USD/JPY at 118.43
Place Order to Sell 1 More 120.43
Stop for ALL at 122.30
As for USD/JPY, wage growth is a big problem that could weigh on Friday’s retail sales report. We know that lower oil prices will drag down the headline number but according to Johnson Redbook, spending over the holidays was also weak. The latest CFTC report from the shortened Jan 5 trading week also showed speculators turning net long yen (which means short USD/JPY) for the first time in 3 years. Position adjustment such as these are typically consistent with major turns in the currency. We anticipate renewed weakness in USD/JPY this week.