Asian session traders pulled a Drake and flipped the switch on higher-yielding bets as they priced in global growth concerns and weak data releases.
That’s partly why I’m looking at Cable today!
But first, here are the major headlines in the last couple of hours:
Fresh Market Headlines & Economic Data:
- Fed debates longer-term crisis-fighting plan, minutes show
- The Fed’s April meeting minutes detailed a potential 2nd-wave virus scenario that could drag on the economy into 2021
- Australia’s manufacturing PMI dips further from 44.1 to 42.8 in April
- Australia’s services PMI improves from 19.5 to 25.5, shows jump in business sentiment
- Lowe: RBA prepared to scale up purchases again if necessary
- Recession-hit Japan’s exports, imports fall due to pandemic
- PMIs show that “severe” economic downturn continues in Japan
- Japan’s May factory activity reels as pandemic hits output, orders
- McConnell: Beefed up unemployment benefits will not be in next coronavirus bill
- China overhauls port checks for iron ore shipments
Upcoming Potential Catalysts on the Economic Calendar:
- Swiss, German, and French markets out on Ascension Day holiday
- France’s manufacturing and services PMIs at 7:15 am GMT
- Germany’s manufacturing and services PMIs at 7:30 am GMT
- Eurozone’s manufacturing and services PMIs at 8:00 am GMT
- U.K.’s manufacturing and services PMIs at 8:30 am GMT
- U.K.’s CBI industrial order expectations at 10:00 am GMT
What to Watch: GBP/USD
Cable is about to hit the 1.2175 zone after hitting resistance 100 pips away at 1.2275.
Remember that the U.K. is printing its manufacturing and services PMIs in a bit. What’s more, market players see both indices printing better figures in May.
Based on today’s PMI bombs, though, it’s possible that we’ll see disappointing (or at least underwhelming) numbers from the reports.
If the PMIs come in weaker than analysts had expected, then GBP/USD could drop to its previous support closer to 1.2080.
Better-than-expected releases, on the other hand, could push Cable back to its 1.2275 levels.
Will the pound find support at the mid-range level?
Both scenarios are likely at this point as a quick GBP/USD volatility analysis shows the pair easily moving by 100 pips in either direction.
TABLE OF CONTENTS (click the following links and read again).