GBPJPY – Back to 142.00?

GBPJPY – Back to 142.00?

Chart Of The Day

GBPJPY staged a major reversal today falling more than 150 points in the wake of weaker than expected US ISM Non-Manufacturing report and unexpectedly dovish BoE. UK central bank gave no signs that it intends to hike rates anytime soon, in fact suggesting that it will not tighten policy until 2018 at the earliest. This surprised the market especially in light of all the hawkish rhetoric pre-meeting. The final MPC vote was 6-2 against and that means that cable is likely to have run out of catalysts to rally further.

Meanwhile, the drop in the employment component of the ISM suggests that tomorrow’s NFP data could be soft or at very least that wage growth will be tepid. That, in turn, could put more pressure on USDJPY and send the pair below the 110.00 figure for good.

All of this combines for a very bearish outlook on GBPJPY which has now set a series of lower highs and if the pair breaks the 144.00 barrier it could quickly head to 142.00

EUR/AUD – Back to 1.4200?

EUR/AUD – Back to 1.4200?

Chart Of The Day

Fundamentals

The euro tried to stage a rally today in the aftermath of the disappointing US Retail Sales data, but the move was short lived as the 1.3400 figure was quickly rejected. The pair remains in a deep downtrend and tomorrows EZ GDP data could seal its fate if it shows that the region has slipped back into a recession. The GDP numbers could force the ECB to consider its won version of Qe just as the Fed is about to conclude its own easing creating a massive discrepancy in the two monetary policies. Meanwhile in Australia, the Aussie remains generally well bid despite the slightly weaker Chinese data. The takeaway for the market is that the Chinese economy is slowing but not drastically which allows the Aussie to maintain its rates. All in all this sets up for further EUR/AUD weakness as the pair now heads to retest the 1.4200 support.

Technicals

The pair has been rejected at the upper end of it range near the 1.4400 level and the turn lower suggests further weakness and a test fo the 1.4200 figure A break there could open a move to 1.4000 while only a close above 1.4500 would relieve the bearish bias.