UK fiscal statement and Alibaba reports earnings
GBP/USD=> The pound falls below 1.19
Alibaba =>The stock has fallen 40% this year
BTC/USD=> The cryptocurrency stays around 16.5k
GBP/USD falls ahead of Autumn Budget
GBP/USD is falling after two days of gains as investors continue digesting data from both the UK and the US and ahead of a busy economic calendar. The pound has gained 0.65% versus the greenback this week after strong wage growth data and a jump in inflation to a 41-year high of 11.1%. Meanwhile, the US has come under pressure after weaker-than-forecast wholesale inflation but found some support from upbeat retail sales, which adds to inflationary pressures. Today, attention is firmly on the UK Autumn Budget, where the Chancellor is expected to announce tax hikes and spending cuts to fill a £50 billion black hole in public finances. Given that many of the measures have been pre-released, the accompanying growth forecasts from the OBR could have a greater influence on the pound. US housing starts and jobless claims will also be under the spotlight.
| US retail sales | Actual: 1.3% (13%) | Previous: 0% |
Where might the GBP/USD price head to?
Haven risen over its 50 sma and falling trendline resistance, GBP/USD has run into resistance at 1.2025. The RSI is over 50 and so supports further upside. Buyers would need to rise over 1.2025 to extend the bullish rally towards 1.2240, the 200 sma. Sellers could look for a fall below support at 1.1775, the July low. A break below here could open the door to the falling trendline support at 1.1510.
Alibaba Q2 earnings preview
Alibaba is due to report earnings for the July – September period to a challenging backdrop. China’s strict zero-COVID restrictions have created problems for both supply and demand. China’s consumption has been under pressure, highlighted by weak retail sales data and by the slowest gross merchandise value growth for the double 11 online shopping event, the largest e-commerce promotional event in China. Ad sales are expected to start recovering after being hammered by lockdowns over the past year. However, there are concerns over the impact of the US chip export legislation on the cloud business. The stock trades down 40% across the year. Wall Street expects EPS of $11.74 on revenue of $208.5 billion, a 4.3% increase, and margins are expected to improve for the first time since 2019. Investors will be watching for updates on its efforts to cut costs and for guidance on further share buybacks.
BTC/USD FTX fallout continues
BTC/USD is steadying after booking losses in the previous session. Most digital assets continue to trade nervously after another crypto firm succumbed to the FTX contagion effect. Crypto financial firm Genisis Global Capital announced a temporary suspension of redemptions and new loans as it emerged as the latest industry player to suffer in the aftermath of FTX’s meltdown. There could well be more FTX-related developments, although these are likely to be less shocking to the market and have a smaller impact as the market gets accustomed to the news. Yesterday, US economic data added to bitcoin’s woes after stronger-than-expected retail sales suggest that the US consumer is resilient heading into the key holiday period, which could result in more inflationary pressures and a more aggressive Fed. Today US jobless claims are due. An unexpected rise in claims could boost risk assets as bad news is good news.
| US jobless claim | Expected: 225k (1%) | Previous: 225k |
Support can be found at 15500 (2022 low) and 13850 (June 2019 high)
Resistance for the pair can be seen at 20k (psychological level) and 21400 (November high).
