Brad Goodwood analyzes current market trends, focusing on the potential for a medium-term US Dollar weakness. The primary catalyst is the upcoming UK CPI data, which could confirm a bullish trend for Sterling. While strong employment data was already priced in, inflation numbers may provide the necessary momentum to pressure the Bank of England into further rate hikes.
Hi there, traders. This is Brad Goodwood
with today's trading action. All right,
now the major focus again still swings back to sterling,
except this time we've got the CPI
numbers and we have the benefit of seeing the really good,
strong employment numbers out of
the UK yesterday. So what's the market going to predict?
Probably higher CPI, right? That's where
the action is. Now, don't fall in love with that opportunity.
What we're looking for is a number
greater than 3.4%. We know a hike is already factored into the market.
So it's no surprise,
but you know what? This will go some way
to confirming the trend is actually swinging
in favor of sterling, right?
If we have a look across the major currency pairs,
you can see it, right? Before it was only a little dribble.
Now we're starting to see the
dollar slide. The beast, it's doing its own thing as per usual,
but dollar CAD really starting to
slide. Now, there's one little thing here where it's stopped moving,
and that's oil has dropped
by about eight bucks, right?
That could really disrupt the dollar-cad move. Euro really sort of
dragging the chain or dragging its feet.
Sterling, it took some time yesterday, right? Even with the
strong employment numbers, I mentioned this yesterday,
that that was already factored into
the market. So if the numbers were strong,
it's not going to go far, and it didn't. But then,
And you know what happened?
We had the weaker sort of second, third tier housing numbers out
of the States. They were terrible.
And that's enough to get Sterling moving topside. Aussie
looks more comfortable. Kiwi,
not quite through that resistance level yet, but it looks like it's
ready to go. So for me, I can really see a dollar sort
of weak situation here. Now, you look at the
equity markets at the moment, they're a bit of a dog's breakfast.
And the whole risk profile of
the majors is a little bit up and down as well.
Now, the price is down on the US yields today.
That means the yields are up.
So that's where we're getting the disruption. There's a little
bit of dollar buying in the market at the moment.
And don't forget, oil has dropped about eight
bucks. That's going to unsettle things as well.
But I'm starting to get really geared up towards
a potential longer term or medium term dollar week trade.
So today, keep a close eye on the
Sterling numbers. If you're looking
for confirmation of what's happening on Sterling,
you will see here 92.8%, the hike is factored in.
So really strong numbers don't do much,
but this is the CPI numbers.
They do actually have a bit more punch. This is the one you want
to be looking at. Now, don't forget,
there are a bunch of other numbers. You've got the core
numbers the PPI the RPI down here retail price index
so there's a whole bunch of things but we
just want confirmation that things are actually strong in the UK
and what that does is not only
keeping uh the Bank of England
in a hiking mode it's probably going to put more pressure on them
to hike again okay so that's the interesting part
of it all right that's it for me guys so i'd be
having a look at sterling sterling crosses
that has got to be where your attention is okay so
don't just stick in the dollar
or get your head stuck in the dollar what you want to do primarily
if i can just get my page up is find the sterling pairs
that actually have um good technical setups
right with yesterday's stronger UK data it might be a bit of a stretch
but still have a look around
that right and if you're not sure about what
to trade don't forget click on the calendar go in
click on stronger you'll see
which instruments you should be trading there and what the impact's
going to be weaker numbers the easiest trade
is there as well sterling CAD probably going to be
on your radar right especially where things are at the moment
but we'll see how that plays out
and my sterling cross charts have actually just uploaded
so get to work on your analysis work out
which of the pairs here is looking good,
which ones aren't, and that might make trading a little
bit easier. All right, guys, have a good one. All the best. Cheerio.
