Trading plan for 04/07/2017:
Holiday in the US certainly does not favor volatility. The Asian indices are under the dash, the commodity market modestly adjusted yesterday's sharp fluctuations: gold will barely rise, and crude WTI cheaper. Only the AUD/USD moved about 50pips after the Reserve Bank of Australia interest rate decision (no change).
On Tuesday 4th of July, the economic calendar is very light in important news release due to Independence Day holiday in the US. Nevertheless, the global investors will pay attention to PMI Construction data from the UK, Producer Price Index from the Eurozone and PMI Manufacturing data from Canada.
GBP/USD analysis for 04/07/2017:
The PMI Construction data are scheduled for release at 08:30 am GMT and the market participants expect a slide in construction from 56.0 points to 55.2 points in the reported month. Despite the expected slide, the PMI Construction index remains above the fifty level since October 2016, so the construction sector of the British economy is still expanding, albeit at a slower pace. Purchasing managers usually have early access to data about their company's performance, which can be a leading indicator of overall economic performance. So far the Uk economy is functioning quite well in the post-Brexit environment, just ahead of the negotiations with the Eurozone.The situation is so good, that even the Bank of England Governor Mark Carney decided to change his rhetoric regarding the interest rate hikes and monetary policy at the recent Central Banks Summit in Portugal, saying there may be a need to limit the monetary stimulation of the British economy if the trade-off facing the Monetary Policy Committee (MPC) continues to lessen. In these circumstances, the policy decision would become more conventional. In conclusion, any data better than expected from the UK economy will make the rate hike more probable event this year, which in result make the British Pound stronger across the board.
Let's now take a look at the GBP/USD technical picture at the H4 timeframe. The price bounced from the technical support at the level of 1.2918 in overbought trading conditions and currently is heading towards the technical resistance at the level of 1.2978. This is the possible range for this pair for today as the volatility might be highly limited due to the US holiday.
Market Snapshot: Crude Oil at 50% Fibo resistance
The price of Crude Oil has managed to hit the 50% Fibo at the level of $47.02 and now the market is consolidating the gains. The market conditions at the H4 timeframe looks overbought and there is a visible bearish divergence between the price and momentum indicator. This would suggest a more sideways price action with a possible test of the intraday support at the level of $46.40.
Market Snapshot: GBP/JPY turning south
After making a local high at the level of 147.11, the price of GBP/JPY is now turning lower as the market conditions are now overbought. Moreover, there is a visible bearish divergence between the price and momentum indicator, so the next intraday support at the level of 145.09 might be tested soon.
