Forex Signals US Session Brief, Sep 3 – Fundamentals Send AUD and the GBP on A Roller-Coaster Ride
Skerdian Meta • 3 min read
The most important event today in forex was the meeting of the Reserve Bank of Australia (RBA) in the Asian session. The RBA cut interest rates twice in June and July as the trade war escalated and the global economy deteriorated and they also let traders know that they would follow the FED. If the FED cut rates, the RBA would cut again. The FED cut interest rates in the last meeting about a month ago, but the RBA has kept them unchanged in the last two meetings. Before the meeting though, we had the retail sales report coming out of Australia, which showed an unexpected decline of 0.1% which gave AUD traders a care ahead of the RBA, assuming that the RBA would sound dovish or even cut rates after such a report and as a result, AUD/USD completed another bearish leg lower. But, they remained pretty much on hold on all fronts today and the Aussie turend bullish in the European session, with the price still climbing as I write.
On another front, GBP/USD broke below 1.20 overnight on Brexit jitters, but it reversed higher again and has claimed back all the losses now. An emergency debate on Brexit has been scheduled for later in the evening today, which raised hopes of an extension to the deadline. Although, it’s difficult to see Brexit changing course now. Just a while ago, the US ISM manufacturing PMI fell below 50 points. This means that manufacturing sector finally fell in contraction in August, just like the rest of the globe and the USD is on the retreat now.
The European Session
- UK Construction PMI Deepens the Contraction – The construction sector has been pretty strong in the UK even during the financial crisis. But, it fell in contraction in February and despite a small increase in April, the activity in this sector continued to decline further. Last month the construction PMI number stood at 45.3 points which means deep contraction, but it was expected to improve to 46.7 points today. Although, the number for August fell to 45.0 points so this sector is heading towards recession now.
- Eurozone PPI Finally Turns Positive – Producer price index inflation has been negative in the Eurozone for 4 straight months, since March. In June the PPI inflation declined by 0.6% as crude Oil prices fell. Although, the PPI number for July was expected to turn positive today and it did, increasing by 0.2% as anticipated.
- The Chinese Place the Blame on the US – China’s foreign ministry commented this morning saying that the US should stop abusing concept of national security. The US should stop smearing China, oppressing Chinese firms. A bit later on, Huawei released a declaration that the US launched cyber-attacks against its systems. that also said that the US government is trying to disrupt its normal operations and US instructed law enforcement to threaten its workers.
- Brexit Talk – Brexit party leader, Nigel Farage, spoke to BBC Radio earlier today saying that he confirms he won’t stand against Tories if Johnson promises to leave EU without a deal. Later on, the opposition leader Corbyn said to propose extension “mechanism” to get Labour MPs to vote for general election. Later on, the UK House of Commons confirms that application for emergency Brexit debate has been submitted.
The US Session
- Canadian Manufacturing PMI Falls in Contraction Again – The manufacturing activity has been weakening in Canada and in April it fell into contraction where it remained for three months. Although, we saw small jump in July which took this sector into expansion again, but today the manufacturing PMI indicator for August fell to 49.1 points, which means contraction again,
- US ISM Manufacturing PMI Falls Into Contraction Too – The US ISM manufacturing report was release a while ago. The ISM figure came at 49.1 points, under estimates and the previous month. This is not a strong report, with new orders and employment falling. The ISM PMI is now at levels last seen in January 2016 and below 50 for the first time since summer of 2016.
- Donald Trump Tweets on Trade and interest Rates – The US president Donald Trump posted a couple of tweets just now, which you can find below:
Trades in Sight
- The main trend is still bearish
- The pullback higher is complete
- The 200 SMA provided resistance
- Stochastic is heading down
USD/JPY has turned bearish again after ISM manufacturing fell in contraction
USD/JPY was climbing higher during the European session as the sentiment was improving in financial markets. But, the soft reading of he US ISM manufacturing report turned the sentiment negative immediately, especially for the USD and this pair has dived now. The 200 SMA provided strong resistance today and after a doji candlestick on the H1 chart which is a reversing signal, the decline came. Now stochastic is turning down after being almost overbought, so USD/JPY turns bearish again.
There goes US manufacturing, falling into contraction just like the rest of the globe. Now the sentiment should turn even more bearish in the coming sessions. The Brexit debate is scheduled in about two hours, so it will be interesting to hear it, especially for GBP traders since the GBP has been very volatile today and the volatility is expected to increase.