GBP Strength On BOE Meeting Minutes April 23, 2015
BOE Minutes Show Agreement Next Move Will Be Rate Increase
The strength in the GBP yesterday was due to this part of the Meeting Minutes.
“All MPC members in agreement that next move in interest rates will be upwards and affects on the GBP and impact to CPI may be sooner than expected”
To be honest I do find that sort of comical that it would create that much GBP strength because is there really anywhere to go from .5% but upwards? I guess they could go negative like many others have but the BOE answer to the weak economy was QE when they reached what has proven to be their lowest point they were willing to go regarding rates.
The kicker in my mind is there wasnt any hint of a time line when said next move would be leaving that window infinite for the mean time. We will have to wait for that one since the rhetoric of “sooner rate hikes” has not been heard for quite some time now.
EUR/USD Conviction During Asia
As usual I will be skeptical of the Asian conviction on the EUR/USD this morning looking for London to confirm it. The two intraday pushes do say they have more potential for the third push up while at the same time this potential conviction puts that in serious doubt so it will be best to remain open today and look to the most significant levels to trade from. The safest short will be from yesterdays highs around 1.0793 while the 1.0740 is valid but riskier for entry. I will be open for the long at the Asia lows at 1.0691 while watching for any confirming of the conviction move from London.
GBP/USD Runs Extended Second Push On BOE Minutes
As I mentioned above I do think the BOE Minutes were kind of a joke but never the less we have two pushes to deal with here. I am concerned on how much it blew the ADR so I wont be treating it as a long only scenario even though thats my bias for today. The best level is the Asian lows that are holding pretty good at 1.5013 but I will be open for the short from the highs around the psych 1.5080 level if there is no long entry from the lows.
EUR/JPY Holds Off On Second Push
The late day Euro weakness held the EUR/JPY back from making the next push so the probability has gone down. The fact we havent seen any thing showing they are willing to push it down leaves it still on the table so I will be looking for the long unless I see the conviction below yesterdays lows. If we see it I will be open for a decent backside entry. Otherwise I will be open for a short from 128.81 during the NY session if I dont catch the long.
Forex News Today
The calendar starts with German GFK Consumer Climate expected to slightly improve which any surprise upward may get them thinking later the Manufacturing and Services PMI data from France, Germany and the EZ will do the same as expected. All being Euro positive. Any large disappointment in German or EZ PMI data will be opposite.
The UK has Retail Sales expecting a slight drop so a disappointment should get them thinking a rate increase will be delayed and be GBP negative. Otherwise a smaller miss upward may give them reason to make the third push up on the GU.
The US has Thursday Unemployment Claims as usual. Expected to slightly drop there is a bigger chance for a disappointment the way I see it. It will depend on how many layoffs have hit in the last week and any pop above 300k should be USD negative. Later is New Home Sales expected to slow as well but with housing data sort of on the back burner a small miss will likely be ignored.
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