Market Overview

Investors are waiting for the RBA meeting.

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GBP/USD

British Construction PMI amounted in July to 62.4 vs. 62.6 in the previous month and median forecast of 62.0. The survey showed that hiring in the sector rose at the fastest rate since at least 1997, when the survey began. The only thing missing is wage growth and the Bank of England is still waiting for a clear signal that tighter labor market puts pressure on wages.

  • The Bank of England's Monetary Policy Committee meeting is scheduled for Thursday. Markets are waiting for any signs of a shift in its policy. The bank's quarterly inflation report next week may strengthen expectations for earlier rates hikes which would be supportive for the GBP. In our opinion the BoE inflation report on 12 August is unlikely to unveil clear indications as to the timing of a first rate hike.
  • The GBP firmed slightly against the USD and the EUR supported by a better-than-forecast UK construction survey. We keep our long position on the EUR/GBP but we have adjusted target and stop-loss levels.

Significant technical levels:
Resistance: 1.6893 (high Aug 1), 1.6926 (high July 31), 1.6945 (10-dma)
Support: 1.6811 (76.4% Fibo 1.6693-1.7192), 1.6783 (low Jun 12), 1.6737 (low Jun 11)

AUD/USD

  • In line with our Friday's strategy we went short on AUD/USD at the level of 0.9330. We set the target at 0.9210 (May lows) and stop-loss at 0.9380.
  • Australian retail sales increased by 0.6% mom in June and down by 0.2% qoq in the second quarter. The median market forecast assumes a rise of 0.4% mom. The AUD/USD went up to 0.9334 after retail sales data but positive reaction was short-lived. Investor are watching RBA decision tomorrow.

Significant technical levels:
Resistance: 0.9388 (high July 30), 0.9416 (high July 29), 0.9425 (high July 25)
Support: 0.9272 (low Aug 1), 0.9257 (low June 5), 0.9229 (low June 3)

Our current trading positions:

EUR/GBP: long at 0.7920, target 0.8000, stop-loss 0.7935 (we have adjusted target from 0.8020 and stop-loss from 0.7875 previously).
EUR/USD: short at 1.3433, target 1.3335, stop-loss 1.3480.
AUD/USD: short at 0.9330, target 0.9210, stop-loss 0.9380.

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Growth Aces

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