GBP USD Continues to Decay
James Hyerczyk from ForexHound.com at 10/23/09
The GBP USD continues to fall, following an unexpected drop in U.K. 3rd Quarter Gross Domestic Product. Today’s news indicated the U.K. recession worsened as it extended into its 6th straight quarter. Traders had estimated a rise in GCP by 0.1% while actual results showed a drop of 0.4%. The charts indicate a move to 1.6198 is likely before there is any significant turnaround.
The EUR USD has been trading on both sides of the psychological $1.50 area. Early today the Euro poked through this area briefly but quickly regained it. Bullish traders are trying to establish support in this area. Traders are trying to keep the volatility down as well as the price to appease the European Central Bank members who want to prevent a rapid rise in the currency. A turnaround in equities is needed or this currency could drift lower into the close.
The USD CAD continues its march toward the major retracement zone at 1.0598 to 1.0611. Traders are pressuring the Canadian Dollar after the Bank of Canada said earlier in the week that the rise in the currency had offset recent positive economic gains. Traders fear more direct action by the BoC if the Canadian Dollar gets too strong or if volatility gets too high.
Sellers are pressuring the AUD USD and NZD USD at the mid-session. Traders are still trying to assess China’s GDP numbers to see if its economy is heating up too much. Some feel that the rapid growth in the country may encourage the government to end its stimulus program earlier than expected. Traders in these two currencies fear that a slow down in stimulus spending will curtail the pace of their country’s economic recovery. The weakness in the U.S. stock markets is helping to erode support. Losses could be limited if equity markets turnaround into the close.