Early morning trading has been dominated by GDP news from China. China reported 10.7% GDP which met expectations, and 18.5% Industrial Production results, which missed consensus. The initial move was an immediate flight to safety, with the dollar soaring higher and the dollar index hitting four month highs. Forex traders are viewing the results negatively as China is speculated to overestimate its GDP numbers. Therefore, the Forex market is interpreting the GDP release as a sign that Chinese expansion is occurring slower than expected. It also fits in well with the overall recent tone from China that it is trying to curb its growth. As such, this could bode negatively to the global economic rebound that is taking place.
The EURUSD is a mess right now, as Forex traders are selling the pair lower on any item of negative Eurozone news. Greece budget worries continues to hamper the euro. Also, after China's GDP was released, Forex traders took no time in dumping the EURUSD which had appeared to be finding support above 1.4100. The pair hit lows of 1.4070, and currently are trading below 1.4100. Looking ahead, equity markets appear to be headed for higher openings today. This could lead to selling of safe havens, and could cause the EURUSD to find some support. Nonetheless, upside trades continue to look risky, and at Go Forex we believe that if this morning's lows are breached, the 1.4000 figure will be tested.
EURUSD Support/Resistance 1.4068/1.4135
Selling continued in the GBPUSD even as Claimant figures were better than expected. The move lower though is more an indication that Forex traders are decreasing their risks, than a specific worry about the UK. As such, as mentioned yesterday, the EURGBP continues to trade lower, as pound outperformance versus the euro continues.
GBPUSD Support/Resistance 1.6245/1.6315
As equities dropped yesterday, and demand from China appears to be stalling, the recent rally in Gold has fizzled. Currently, Gold is trading at 1114. As the chart below shows, gold is now trading within a triangle pattern. This indicates that traders are unsure about the move in Gold, and therefore Gold could be vulnerable to another big move, once it breaks out of its triangle.