Todays Largest Percentage Movers: 

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GBPUSD

Smattering Of UK Data

With no economic releases surrounding the dollar, the market movement potential of the GBPUSD was left up to the British Pound.  Data from the country was no further than a click away as the different scheduled posts for the day were separated by quite a space of time.  The first report to feed into the market was the British Chambers of Commerce quarterly survey of economic trends.  The report revealed a few pieces of positive data as seen from the perspective of the surveyees.  Particularly exports and employment changes caught traders attentions.  In both the services  and manufacturing sectors, orders and sales of British goods abroad slipped significantly; the later more so, suggesting a potential contraction in trade in the coming months.  However the positive news from the report was the rise in employment reads from both areas of the economy, which backs expectations of a recharged domestic consumer.  Much later in the session, reports of leading and coincident indicators sent mixed signals.  While the current situation improved as to merit a turn back to positive growth, the leading measure fell from 0.9% growth to 0.2% contraction in May.  This was mostly due to a drop in perceived consumer confidence and a poor performance in equities.  After all this data, the pound was able to shake any selling feelings traders might have had with the BoE announcing the successors to Walton and Lambert on the MPC.  With a full house, policy making can go on as usual.

Technically Speaking

The GBPUSD staged a small rally to become one of the top market movers on an otherwise slow day of trading. It stopped short of a three-month upper channel to end the day just above its 10-day SMA. If it fails to clear its short term trendline at 1.8450, the GBPUSD could retest the 50% retracement of its 1.8090-1.8540 wave at 1.8330. If it indeed pierces the ceiling at 1.8450-1.8480 range, it could run unfettered to its twice-touched 2 month high at 1.8550.


GBPJPY

Pricing In Contingencies

While the scheduled economic data coming out of the  Land of the Rising Sun was on the large positive, most large traders and banks were preparing for different scenarios in regards to the BoJ announcement due tonight.  First, to the docket, Japans current account surplus ballooned in May as auto sales to foreign purchasers rebounded, Japanese income from foreign investment picked up and profit earned by Japanese owned companies abroad marked an annualized record.  The absolute value from this indicator was all yen bullish for an export driven economy; but on a relative basis, the figure was less than impressive.  The consensus the market predicted for the trade account was for a 1.649 trillion yen surplus, but the actual figure was only 1.614 trillion.  As the market had priced in a more favorable gap, the revaluation of the balance put some traders off the currency.  Traders were determined not to repeat this mistake when it came the central banks policy decision standing only hours  away.  Expectations for a possible shift in the lending rate may have run a little high in the past few days and weeks.  Consider the pressure the BoJ is under from politicians to leave the rate untouched, scandal still in the back of peoples minds and not to mention a generally cautious policy group.  Anything less than a 25 basis point hike with promises of more in the near future, could be construed as somewhat bearish.  However, anything beyond these two points could send yen soaring across the board.

Technically Speaking

The volatile GBPJPY rebounded off of its 10-day SMA at 211.50 to finish nearly 130 points higher on the day. Now growing nearer to its 8-month high of 213.70, the currency pair could have difficulty continuing its torrid ascent without a short-term retracement. Indeed, it currently faces stiff resistance at the confluence of its upper Bollinger band and psychologically significant 213.00 mark. It trades at 212.75 at time of writing, just 25 points above its twice-tested previous monthly high of 212.50. If it breaks below, it could make a run to stiff support at 209.60. 


EURGBP

A Blow To The Hawks

In terms of potential from the European Central Bank and the Bank of England, the more likely hawk is undoubtedly ECB.  The MPC has just flushed out its ranks and there are rumors of dovish comments from at least one of them a new Stephen Nickell perhaps?  However, while the BoE is firmly set in go-nowhere position, the Euro-Zone counterpart could fall victim to poor data since expectations of a hike are running hot for bulls.  This was exactly the test provided the EURGBP today.  As UK data passed with a mixed tone, the major European data struck a note of doubt for the euro.  Both final reads of German inflation and preliminary numbers of French price growth had the potential of making ECB President Trichets warning of inflationary pressures empty threats.   The revised EU-harmonised gauge of German annual inflation ticked lower to 2.0%, while the same read from France was sliced from 2.4% to 2.2%.  Even with todays ECB Monthly Report for July reiterating the catchy strong vigilance bulls have rallied around, if inflation is below the banks upper bounds, then there is little need for strong vigilance.

Technically Speaking

The EURGBP tumbled on the day to finish at a new monthly low. It formed a triple top in its most recent consolidation range at the 0.6930 level and broke through yesterdays spike low in the process. With all oscillators showing a clear oversold signal, the EURGBP may be setting a small stage for a rebound. The nearest support level can be found on the three day consolidation range near its consolidation range on 6/23 at 0.6870, while resistance lies above at the psychologically significant 0.6900 level.