Trading plan for 10/07/2018
The night went quietly with slight changes in the value of major currencies accompanied by growing indices. The pound stabilizes after the political storm from yesterday, and the Turkish lira tries to recover from the sharp sell-off related to the controversial changes in the central bank and the FinMin.
Among the major currencies, the Asian session does not bring many changes. Traders can see some strengthening of USD from EUR/USD going down at 1.1740 and USD/JPY higher at 111.10.
In Norway, June CPI inflation was 0.6% against expected 0.5%. The annual price growth amounted to 2.6% vs expected 2.4%. EUR/NOK dived to 9.38 after the decision, although it quickly rebounded to 9.41, more or less at the starting point.Earlier, data on June CPI inflation from China dropped in line with consensus (1.9% YoY), while PPI was higher than forecasted (4.7% vs. 4.5%).The stock market continues to stabilize in a positive envelope. Japanese Nikkei225 grows 0.7% and Hang Seng gains 0.1%. Worse is Shanghai Composite, which loses 0.5%. This is a recovery of yesterday’s increases by 2.8%- the biggest daily increase since August 2016.On the commodity market, crude oil gains with the support of information on production disruptions in Canada and Libya. WTI is at USD 74.2.
On Tuesday the 10th of July, the event calendar is busy in important data releases. On Tuesday’s macroeconomic calendar, traders will find, among others publication of data on industrial and manufacturing production from Great Britain. The British balance of foreign trade and GDP forecasts according to NIESR. From Germany, traders will get ZEW index values, which is an indicator showing the moods regarding the economic situation in Germany.
GBP/USD analysis for 10/07/2018:
GBP / USD moves just above 1.3230 after a sharp fall from yesterday, when the resignation of Boris Johnson from the head of the Ministry of Foreign Affairs triggered a flurry of speculation about the crisis in the government and the potential removal of Prime Minister May. So far, the motion of censure has not been filed and the GBP / USD is above the wells (1.3186), but the situation is developing.
Let’s now take a look at the GBP/USD technical picture at the H4 time frame. The big down candle clearly indicated the weakness of bulls to rise higher towards the swing high at 1.3472. The candle has closed near the technical support zone between the levels of 1.3191 – 1.3217 and now the market is slowly bouncing higher. The momentum remains neutral, but the market conditions are clearly overbought, so the bears might attack the level of 1.3191 again. A breakout lower will directly expose the level of 1.3100 for a test. Poor data from the UK will only add fuel to the fire.