Forex trading plan for August 19
Federal Reserve's July meeting minutes showed policymakers were divided on raising interest rates in the near term. Although the Fed members were generally positive about America’s economic outlook, several of them thought that a slowdown in the future pace of hiring would be an argument against a rate hike in the near term. It means that the market won’t increase pricing of rate hike by the year-end. This definitely won’t help US dollar in the coming days.
Economic data released in the United States on Thursday provided the greenback with some help: unemployment claims came better than expected, while Philadelphia Fed manufacturing index came into positive territory. It was the last important data release from the US this week.
EUR/USD is following our main scenario. The pair settled above 1.1300/1290 and may extend gains to 1.1375/80 and 1.1400. Further support is at 1.1260. Demand for the euro’s supported by the euro area’s big current account surplus.
GBP/USD rose to 1.3170. British retail sales rose by 1.4% in July after falling by 0.9% in June. Solid data indicates improving conditions. Technically advance may extend to 1.3235/1.3300 if it finds support around 1.3100/1.3070. The UK will release public sector net borrowing data at 08:30 GMT.
USD/JPY tested levels below 100.00, but once again found support in the 99.70/50 area. We expect the pair to consolidate between here and 100.50. In case of a break higher new sellers will appear around 101.20.
Australia released bloc of positive labor market data, while oil went up supported by an unexpected drop in US inventories and optimism the OPEC might reach a deal to freeze output next month. AUD/USD, however, failed to stay at the day’s highs above 0.7700, so decline to 0.7610/00 looks likely.