Euro Extends Rally as Data Affirms Optimism, Pound Unmoved by CPI
Euro surges broadly today as incoming economic data is in line with a brighter outlook. Some attribute that rally in Euro to the weakness of Dollar. The greenback is pressured as the markets are getting more doubtful on US President Donald Trump's implementation of economic policy. For the very least, he is constantly being distracted by other issues, like currently, his firing of former FBI director James Comey and subsequent sharing of sensitive information with Russia. But it should be noted that both DAX and FTSE 100 hits record highs today. The moves in the markets are clearly driven by optimism. Released in US, housing starts dropped to 1.17m annualized rate in April while building permits dropped to 1.23m.
Pound unmoved by strong inflation reading
UK CPI accelerated to 2.7% in April, up from March's 2.3% and beat the expectation of 2.6%. Core CPI rose to 2.4%, up from 1.8% and beat the expectation of 2.3%. RPI accelerated to 3.5%, up from 3.1%, beat the expectation of 3.4%. PPI input slowed to 16.6%, PPI output was unchanged at 3.6%, PPI output core rose to 2.8%. Sterling received a little boost from the set of stronger than expected inflation data. It's argued that the pop in the CPI readings is expected and could instead drag down price growth in the coming months. On the other hand, FTSE surges to a new record high today and stays firm around 7500 handle after the release.
GBP/USD Daily Outlook
No change in GBP/USD's outlook as it's still bounded in a tight range below 1.2987 temporary top. Intraday bias remains neutral for the moment. With 1.2830 minor support intact, another rise could be seen. However, price actions from 1.1946 are viewed as a corrective pattern. Hence, in a case of another rise, we'd start to look for reversal signal again above 1.2987. Meanwhile, break of 1.2830 will indicate short term topping. In such case, intraday bias is turned back to the downside for 1.2614 resistance turned support first.
EUR/USD Daily Outlook
EUR/USD's rally accelerates further today and reaches as high as 1.1073 so far. 100% projection of 1.0339 to 1.0828 from 1.0569 at 1.1058 is already met and there is no sign of topping. Intraday bias remains on the upside for 138.2% projection at 1.1245, which is close to 1.1298 key resistance. For now, rise from 1.0339 is still viewed as a corrective move. Hence we'd expect strong resistance below 1.1245/98 to limit upside and bring reversal. On the downside, below 1.0989 minor support will turn bias neutral and bring consolidation. But break of 1.0838 support is needed to indicate short term topping. Otherwise, further rise will remain in favor.
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***Information contained in this news letter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision making, but merely provides information from the market for its clients as additional information being made available as per the events occurring in the financial markets.
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