Daily Forex Trading Review: GBP Recovery to Continue? – August 5, 2014

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Daily Forex Trading Review: GBP Recovery to Continue? - August 5, 2014

The US dollar gave up ground to some of its major counterparts in recent forex trading since there were no major reports to give it any support for the past few hours. After all, the bleak NFP headline figure appears to be weighing on demand for the dollar for now. ISM non-manufacturing PMI and factory orders data are up for release later today and the PMI might show an improvement from 56.0 to 56.6 while factory orders might print a 0.6% rebound. Stronger than expected data could give the dollar a much needed boost.

The euro was mostly stuck in consolidation recently even as Spain’s unemployment change report missed expectations. The report showed a mere 29.8K drop in joblessness versus the projected 116.3K figure. Sentix investor confidence in the region marked a sharp decline from 10.1 to 2.7 instead of just dipping to 9.1. For today, Spanish and Italian services PMI are up for release along with euro zone retail sales data. Consumer spending could pick up by 0.4% in the region after staying flat in the previous month.

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The pound made a small recovery to the dollar even as the construction PMI from the UK showed a slowdown in expansion. The PMI fell from 62.6 to 62.4, slightly better than the consensus at 62.1. For today, the services PMI is up for release and this might have a bigger impact on pound movement as this sector comprises majority of overall economic activity. The figure is slated to climb from 57.7 to 58.1 and reflect a stronger expansion which could lead to a forex trading bounce for the pound.

The franc edged slightly lower to the dollar in recent forex trading as the SVME PMI came in weaker than expected but still reflected an improvement. The figure climbed from 54.0 to 54.3, short of the estimated rise to 56.2. There are no reports due from Switzerland today as the franc might take its cue from the euro or from market sentiment.

The yen had a mixed performance as it regained ground to the dollar but weakened to the pound and Aussie. Recent data from Japan has been weaker than expected yet it appears that the yen is functioning more as a counter currency these days. There are no major reports lined up from Japan today, leaving the yen at the mercy of forex trading risk sentiment once again.

The Aussie was spared from a deeper selloff in recent trading when Australia’s retail sales report showed a stronger than expected 0.6% increase. Earlier today, its trade balance came in better than expected as well. Later on, the RBA interest rate decision could have a more lasting impact on Aussie movement while the New Zealand jobs report might dictate longer-term Kiwi direction. There are no reports due from Canada today.

To contact the reporter of the story: James Brennan at james@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.