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Trading plan for 03/07/2017:
During the night AUD and NZD lost about 0.4% against USD as the volatility of other currencies is minimal and barely exceeds 0.1%. Crude oil recouped all yesterday's losses, which we observed after reading the EIA report. Now WTI is trading at $49.40 level. On the Asian stock market the negative sentiment prevails, although the decline did not take on considerable size.
On Thursday 3rd of August, the event calendar is very busy with the important news release. The news of the day will be Bank of England Interest Rate Decision, Monetary Policy Summary, and BoE Governor Mark Carney's speech. Moreover, during the early London session, Services and Composite PMI readings will be released from across the Eurozone and the UK. During the US session, ISM Non-Manufacturing PMI, Factory Orders, and Unemployment Claims data will be released.
GBP/USD analysis for 03/08/2017:
The Bank of England Interest Rate Decision, Monetary Policy Summary, MPC Official Bank Rate Votes, MPC Asset Purchase Facility Votes, and Inflation Report are scheduled for release at 11.00 am GMT. BoE Governor Mark Carney is scheduled to speak at 11:30 am GMT. Market participants do not expect any change in the interest rates, so the BoE should leave them at the level of 0.25%. No change is expected in Asset Purchase Facility (435bln Pound) and Asset Purchase Facility Votes (0-0-8). Nevertheless, investors expect a change in the MPC Official Bank Rate Votes that should change from 3-0-5 to 2-0-6. The hawkish surprise was seen in June, when the MPC last convened and when three members dissented in favor of hiking the interest rate by 25 bp. It is not likely to be repeated this time around. The main reason is the recent data which strengthed dovish arguments, though it is expected to be a divided vote once again. The support for hawks might come from Governor Carney himself as he said many times before that the BoE is ready for the interest rate hike and it can even hike today. Another important factor will be the tone of the Monetary Policy Summary minutes, while the quarterly Inflation Report is likely to revise downwardly both GDP growth and inflation forecasts.
Let's now take a look at the GBP/USD technical picture at the H4 timeframe. From the swing low at the level of 1.2587 to the recent local high at the level of 1.3250, the market has made a clear geometric pattern called 1-to-1 (measured from the pennant pattern low at the level of 1.2811), so the market might be susceptible for at least a healthy pull back towards the technical support at the level of 1.3161 and 1.3113 after market participants take their profits. The overbought market conditions and visible bearish divergence support this view.
Market Snapshot: NZD/USD breaks below the trend line
The price of NZD/USD has broken below the trend line support around the level of 0.7435 and now is testing the technical support at the level of 0.7398. The market conditions look oversold, so the price might now test the trend line from below and in a case of another failure, might continue the sell-off towards the next technical support at the level of 0.7333.
Market Snapshot: Crude Oil bounces back
The price of Crude Oil had bounced from the technical support at the level of $48.39 and managed to retrace 61% of the recent sell-off. Another attempt to violate the 61%Fibo at the level of $49.61 will expose it to test the recent local high at the level of $50.41. On the other hand, any violation of the level of $48.39 will accelerate the sell-off towards $47.53 - $47.30.
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