Majors tread water as Chinese Inflation data comes into focus

What Happened Yesterday

We’ll it’s business as usual as another day passes without any major economic data releases. The RBNZ raised their inflation forecasts and that led to a short squeeze in the NZDUSD, but otherwise it was pretty orderly with no surprises.

The USD Index continues to trade sideways just below 95.00 despite efforts from numerous news outlets trying to drum up negative interest in Trump’s tax reform plans.

U.S. House of Representatives Speaker Paul Ryan on Wednesday left the door open to a possible delay in implementing a huge corporate tax cut, following a Washington Post report that his fellow Republicans in the Senate are exploring the option.

Any potential delay in the implementation of tax cuts, or the possibility of proposed reforms being watered down, would tend to work against the U.S. currency, analysts said.

On Monday, the Federal Reserve Bank of New York confirmed that William Dudley, among the most influential monetary policymakers throughout the financial crisis and its aftermath, expects to retire by mid-2018.

That raised another question over leadership at the central bank, less than a week after Trump chose a new Fed chief.

It is difficult for markets to trade the Fed at the moment, so that kind of leaves most of the focus on tax reform.

The British pound weakened against the dollar, weighed down by a spiraling political drama in Westminster and growing doubts over Prime Minister Theresa May’s ability to deliver a good Brexit deal.

The Canadian dollar strengthened against its U.S. counterpart, adding to its gains after comments by Bank of Canada Governor Stephen Poloz the day before that were less dovish than investors had expected.

Today’s Fundamental Drivers

There’s a few bits and pieces coming out but the highlights will be the Chinese inflation data (PPI & CPI) and the US weekly Jobless claims.

Technical Set Up – What’s Happening with the Majors

Most of the majors are grinding away within recent ranges but at least today we have a few numbers that could provide a spark to break out of these ranges, or at least give the majors a sign of life!

AUDUSD

Resting right on key resistance. Focus is on today’s Chinese data as it could provide the spark for a move either way.

Check our detailed AUDUSD Analysis

NZDUSD

Squeezing higher after the RBNZ raised inflation forecasts. Today’s Chinese data will be key to the next move.

Check our detailed NZDUSD Analysis

USDJPY

Coming back to test 113.90 resistance. We have some Japanese data today but I doubt we’ll see it react as the data is generally always spot on forecasts.

Check our detailed USDJPY Analysis

EURUSD

Sideways with a downward bias still. Stops building above 1.1620.

Check our detailed EURUSD Analysis

GBPUSD

Geopolitics creeping in again and has Sterling on back foot. Still within recent ranges though. Focus is on Friday’s Manufacturing data.

Check our detailed GBPUSD Analysis

USDCHF

Sideways with not a lot going on at the moment.

Check our detailed USDCHF Analysis

USDCAD

It’s broken down through 1.2735 support but failing to go on with it. Too hard for me at the moment.

Check our detailed USDCAD Analysis

Today’s Focus – Major Currencies in Play

You need to follow the economic data releases & best technical set ups to work out where the majority of action and interest will be.

AUDUSD

Technical Set Up: Support @0.7626 & Resistance @0.7685 & 0.7735

Fundamental Driver: Chinese CPI data

Potential Strategy: The downside is more appealing because it goes with current Aussie sentiment, but short squeeze is also on the cards if the data is strong.

Check our Next Best Trades list for full details.

Summary

We’re slowly making our way through the week, but it’s been like watching paint dry.

The focus now switches to today’s Chinese and US data.

You can expect a fair amount of intrest in these releases as traders get an itchy trigger finger after a slow week.

Tune up your charts & get ready to trade…..see you in the 247 Trade Zone!

Brad

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