- GBP/USD prints a new weekly low at 1.3745.
- Awful UK’s Retail Sales report fails to boost the British pound.
- The greenback strengthened despite a fall in Consumer Sentiment.
GBP/USD is sliding in the American session to new weekly lows, trading at 1.3754, down 0.26% at the time of writing. As we approach the London Fix and head into the weekend, we could expect some downward pressure on the back of the dampened market sentiment.
The market sentiment is downbeat. US stocks are losing ground, following the European trend, and bond yields rise as investors turn cautious on the global economic recovery amid worries about the Delta strain and risks from China.
During the European session, the Office for National Statistics reported that Retail Sales shrank 0.9% in August, worse than the 2.5% gain (YoY) foreseen by economists. This negative data adds to concerns about economic recovery, albeit sales volumes remain above pre-pandemic levels.
Across the pond, the University of Michigan Consumer Sentiment rose to 71 in September, a tick lower than the 72.2 expected by analysts. Digging a little deeper on the report, buying conditions for homes, household durables, and vehicles fell. The report said that the declines were attributable to high prices. Consumers expect inflation to rise 4.7% in 2022.
Commenting on the data, Richard Curtin, Surveys of Consumers chief economist noted, “the steep August falloff in consumer sentiment ended in early September, but the small gain still meant that consumers expected the least favorable economic prospects in more than a decade.”
Heading into the next week, the Federal Open Market Committee will meet to discuss monetary policy on September 21-22, followed by the Bank of England on September 23.
The USD/JPY currency pair has traditionally had a close correlation with U.S. Treasuries. When interest rates head higher, Treasury bond prices go down, which lifts the U.S. dollar, strengthening USD/JPY prices.
A foreign exchange correlation is the connection between two currency pairs. There is a positive correlation when two pairs move in the same direction, a negative correlation when they move in opposite directions, and no correlation if the pairs move randomly with no detectable relationship.
You can trade on forex pair correlations by identifying which currency pairs have a positive or negative correlation to each other. In the conventional sense, you would open two of the same positions if the correlation was positive, or two opposing positions if the correlation was negative.
A good rule of thumb for traders new to the market is to focus on one or two currency pairs. Generally, traders will choose to trade the EUR/USD or USD/JPY because there is so much information and resources available about the underlying economies. Not surprisingly, these two pairs make up much of global daily volume.
The major currency pairs on the forex market are the EUR/USD, USD/JPY, GBP/USD, and USD/CHF. The four major currency pairs are some of the most actively traded pairs in the world, along with the so-called commodity currency pairs: USD/CAD, AUD/USD, and NZD/USD.
Supply and Demand Trading is the most Profitable Forex Strategy as long as you are able to understand Price Action. If you don’t care about the Price Action, you can add in the chart everything you want.
What is the buy the dip day trading strategy? This is the easiest day trading strategy out there! The buy the dip day trading strategy is a trend following strategy where a trader looks to buy a small pullback in the overall upside trend.