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Carney

BOE Interest Rate Hike Sooner Rather Than LaterThe BOE’s interest rate decision scheduled for May 11 will be the main event risk on the UK economic calendar. Based on the market consensus the BOE is expected to keep its policy rate unchanged. However, what is far more important from the pound’s perspective and for the market is how many BOE policymakers might lean towards tightening and vote to raise interest rates. What is particularly important with this interest rate decision is if there is going to be any material change in the MPC official bank rate vote. The consensus is for the BOE to hold rates unchanged with a 1-8 vote. Another theme that hasn’t generated a greater traction for GBP/USD exchange rates is the BOE‘s change of tone towards its current monetary policy. This is not an active market theme thus the market didn’t price in the possibility of interest rates going higher. The market works like a discounting mechanism and we’ll start to see in the near future this fundamental theme to drive currency exchange rates as an effort to price in advance the effect of a possible rate hike. At the end of last month, Michael Sounders one of the BOE policymakers suggested that interest rates can rise as both inflation and growth are on target and even to exceed BOE’s forecasts. Saunders is the second voice to support higher rates after Kristin Forbes, another MPC member, who already voted in March to raise rates. An effective 7-2 vote can be the catalyst for speculation that interest rates will finally go up. This seems the right move because historically speaking the BOE has always followed the FED footsteps when it comes to the monetary policy. US vs. UK Interest Rates The inflation rate has reached levels not seen since September 2013 after jumping to 2.3% last month (see chart below) above BOE target. Despite the UK GDP growth slowdown to 0.3% in the first quarter, the growth forecast for the UK economy remains positive and sooner rather than later BOE will be forced to change its rate policy. It will be difficult for GBP/USD to sustain any move above 1.3000 big psychological number without a solid fundamental backdrop. Central banks at the end of the day they do fundamentally drive what is happening in the currency. With the general election coming up in the UK the importance of the BOE has been slightly sidelined. The elections had implications what the BOE will do, but it’s all about relative action from the central bank’s perspective. There is less political uncertainty now than it was before and after the Brexit event. The conservative party is headed for a decent victory in the general elections so there is a good case to be made for speculators to shift their focus towards the interest rate theme. The heightened uncertainty over EU’s economic and political landscape can also be the driver for more UK capital inflow. Based on the Wave Analysis , we are expecting some selling pressure to push the GBPUSD lower. A bearish divergence has been forming with a confluence of a 123.6% Fibonacci ratio. A bearish break below 1.2825 can potentially see more selling momentum for the GBPUSD, pushing it lower towards 1.2486 area.
Short
by KarYong
BOE monetary policy and rate decision - Saving the Pound? On Thursday BOE will publish its rate decision and monetary policy summary. Following latest Carney's speech, people now know that BOE is starting to monitor the currency's weakness following Brexit - They will pay attention to what BOE will have to say about it in the coming meeting. Technically 1.21 is the current support zone. The price is holding above it and created couple of Intraday reversal signals once it touched it... Still the price is below the Fast MA line and hasn't created any higher high or higher low till now. With FOMC before BOE meeting we can see GBPUSD pressing down towards 1.21 again and perhaps even 1.2. Will it be a buying opportunity towards the BOE meeting? Will be interesting to monitor - We will get a potential confirmation signal if GBPUSD will climb above the MA line for the first time since its Flash Crash. Read more trading ideas in my newsletters (link in signature)
Long
by themarketzone
GBP GOV CARNEY IS ABOUT TO SPEAK - COMMENTSWell most of the participants are expecting a Pound to go down, but we already had a surprise effect with interest rate decision, so what to expect now? 1 Economy - nothing has changed yet, even though G is leaving, it will take time 2 Friday - due to some explanations on Behavioural finance studies, the market is most likely to be illogical during the Friday, so any move that might happen on Friday can be considered as a false one 3 Technical Analysis - in a short term perspective the price can actually have a volatile day 4 in case of a late signal there is a possibility for a stationary market later, so the moves can happen during the Monday's Asian session. So choosing not to trade today at all might be a good idea my fellow traders! Have a great day!!! And don't destroy your 2 days weekend with a 1 day - Friday!!!
by Marenno
3
USD/ DXY: FOMC DUDLEY & WILLIAMS - BREXIT & US ECONOMY SPILLOVER1. IMO Dudley tipped to the dovish side, especially on key inflation highlighting that it is " rising again, but still low". Other rhetoric reaffirmed much of what has been said post the brexit vote e.g. Uncertainty being the biggest factor. 2. Meanwhile, Williams was notably more upbeat/ optimistic, shrugging off the US's shock miss NFP report to instead point out that the underlying trend remains upward. He also relatively underplayed Brexit by saying his baseline view is that it will have a "modest impact" vs Dudleys sitting on the fence of "too soon to say". Further, Williams went on to underplay Brexit as a "normal global economic uncertainty". 3. Nonetheless, both found common ground regarding the "Uncertainty" surrounding the Brexit US spillover effects and "data dependency" being key for FOMC decisions. This has been the case not only between the two today but also for several members in the past few weeks/ months. 4. USD now looks to FOMC Minutes from the June Meeting for any further hints of net member direction and NFP on Friday. I expect much of the same, with bias to Dudley's more cautious/ dovish approach likely to underlie the Minutes but hopefully an outstanding NFP report to spur the USD. 5. The 30-day Federal Funds Rate futures market sold-off Fridays Hawkish gains today, with the Implied Probability of a 25bps FOMC rate hike significantly flattened across the curve, with a Sept/ Nov Hike now at 0% vs 5.9%, Dec at 13.7% vs 22.3% and Feb 2017 at 13.4% vs 21.8%. We also saw a dovish skew across the tenors in favour of a 25bps cut, with Sept/Nov probabilities increasing to 2.4% vs 2.2% Sept and 4.4% vs 2.2% Nov. July expectations traded flat at 97.6% no change. 6. Nonetheless, it was William's bias that won the day as DXY Traded well offered, up 66pips at 96.21, much of which driven by the risk-off turn markets have taken, sending USD higher across the board, most notably against the antipodeans (RBA driven), CAD (oil 4% lower) and GBP (down 2%) as BOE Gov Carney continued to provide dovish sentiment. Also imo earnings season $ demand may have started to price the index higher. 7. Going forward I expect to see continued USD strength across the board as GBP, the Antipodeans, CAD and JPY are likely to realise weakness on the back of poor economic fundamentals, brexit, and further oil falling (global growth worries - brexit/ china linked). Also I expect BOJ easing to price UJ higher in the near future which, all in all, should provide the perfect environment for a higher DXY and USD especially against JPY, NZD and GBP over the next 4-6wks for the attached reasons. End of week DXY should close up 3%+ if NFP comes in firm/ strong - 98.5 target Dudley on US Economy: - Dudley: Brexit Main Uncertainty, Too Soon to Say Impact Yet - Dudley: Investment in U.S. Also an Uncertainty - Dudley: Inflation Is Rising Again, But Still Low - Dudley: Fed Policy Remains Data Dependent - Dudley: Uncertain Outlook Means Can't Predict Fed's Next Move Williams on Brexit: - "I think the economic effects, on the baseline scenario, are relatively modest, but there still is the uncertainty about how things are actually going to play out," - "I would say that what's happened with Brexit has been just one of the normal uncertainties that always occur in the global economy and things that we just have to take into account," - On the poor US Jobs Report - "the underlying trend continues to be good, continues to be above trend and continues to show that the economy is strengthening and not weakening,"
TVC:DXYLong
by QuantumLogicTrading
GBPJPY M15 Gartley complete, now ButterflyI was shorting this pair for couple of days, now is (probably) time for some longs. Why? Move down was so strong, it needs to react back. Entry i Butterfly's D point - 127.2% of XA, confimed by 161.8% of small correction. Not so much confirmation - we all know it is game :) And couple of facts about Butterfly: The general extension structure of the Butterfly pattern was discovered by Bryce Gilmore. However, the exact alignment of ratios was defined in Scott Carney's 1998 book, "The Harmonic Trader." This has become the industry standard for the structure. Scott's ideal Butterfly Pattern requires specific Fibonacci ratios to validate the structure. These measurements include a mandatory 0.786 retracement of the XA leg at the B point, which defines a more precise Potential Reversal Zone (PRZ) and more significant trading opportunities. The Butterfly pattern must include an AB=CD pattern to be a valid signal. Frequently, the AB=CD pattern will possess an extended CD leg that is 1.27 or 1.618 of the AB leg. Although this is an important requirement for a valid trade signal, the most critical number in the pattern is the 1.27 XA leg. The XA calculation is usually complemented by an extreme (2.00, 2.24, 2.618) BC projection. These numbers create a specific Potential Reversal Zone (PRZ) that can yield powerful reversals, especially when the pattern is in all-time (new highs/new lows) price levels.
Long
by leszekstanislaw
GBPUSD Long after important news todayGBPUSD went into an uptrend after it broke the January/February downtrend range. (Post-SNB funtimes) In 1 hour BOE Gov Carney can bring us some further good news, like the BOE delivered recently allready. Like in my USDCAD chart I mention here that in 6 hours from now Fed chair Yellen speaks as well. If that is no strong news for USD we have a nice long on our hands here. Yours, DogeBuffet p.s. GBP had good numbers in the last weeks, especially the inflation report.
Long
by DogeBuffet