GBP/USD Retail Positioning Hits Extremes Ahead Of NFP, BoE Meeting

Video Length: 00:08:42

Talking Points:

- GBP/USD Retail Positioning at Extremes Following Failed Test of May Low (1.5088).

- AUD/USD Rebound Stalls at Former Support; Downside Targets in Focus Ahead of RBA Meeting.

- USDOLLAR Fails to Retain Opening Weekly Range as ISM Manufacturing Disappoints.

GBP/USD

Chart - Created Using FXCM Marketscope 2.0

• GBP/USD remains at risk for a further loss over the near to medium-term as the Relative Strength Index (RSI) retains the downward trend from back in May; need a break/close below 1.5088 (May low) to 1.5090 (61.8% retracement) to favor a further decline.
• However, with growing speculation for a greater dissent at the Bank of England’s (BoE) October 8 interest rate decision, may see GBP/USD consolidate ahead of the policy meeting amid the tightening race with the Federal Reserve to normalize monetary policy.
• DailyFX Speculative Sentiment Index (SSI)shows retail crowd remains net-long GBP/USD since August 21, but the ratio is hitting recent extremes as it climbs to +3.11, with 76% of traders long.

AUD/USD

• AUD/USD struggles to retain the gains following positive data prints out of China – Australia’s largest trading partner – with the pair pulling back from former support around 0.7080 (38.2% expansion) to 0.7090 (78.6% retracement).
• Even though the Reserve Bank of Australia (RBA) is widely expected to keep the benchmark interest rate at 2.00% at the October 6 meeting, dovish language accompanied by a toughened verbal intervention on the local currency may spark a resumption of the long-term bearish trend for AUD/USD.
• As AUD/USD struggling to push back above former support, will continue to keep a close eye on the narrow range as the pair continues to close above 0.6950 (161.8% expansion) to 0.6970 (50% expansion).

USDOLLAR (Ticker: USDollar):

Chart - Created Using FXCM Marketscope 2.0

• The Dow Jones-FXCM U.S. Dollar slips to a fresh weekly low ahead of the Non-Farm Payrolls (NFP) report amid the ongoing mixed batch of data coming out of the U.S. economy; still waiting for a break of the bearish formation on the RSI to favor a resumption of the long-term bull trend.
• Will keep close eye on the fresh comments from San Francisco Fed President John Williams as he serves as a voting-member on the FOMC; will we see a growing dissent at the October 28 interest rate decision?
• Despite the failure to retain the weekly opening range, closing price above 12,082 (61.8% expansion) should favor a move into 12,162 (April high) to 12,176 (78.6% expansion).