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Trading the News: Bank of England Minutes (based on GBPUSD to Threaten Key Resistance on Hawkish BoE Minutes article)
The British Pound may make a more meaningful run at the 1.6300 handle in the days ahead should the Bank of England (BoE) Minutes spur a more material shift in the policy.
What’s Expected:
Time of release: 11/20/2013 9:30 GMT, 4:30 EST
Primary Pair Impact: GBPUSD
Expected: --
Previous: --
Forecast:--
Why Is This Event Important:
There’s growing speculation that BoE Governor Mark Carney will implement the exit strategy ahead of schedule in light of the stronger recovery, and the policy statement may highlight a growing discussion to lower the unemployment threshold as the central bank raises its outlook for growth.
How To Trade This Event Risk
Bullish GBP Trade: BoE Sounds More Hawkish; Shifts Policy Outlook
- Need green, five-minute candle following the statement to favor a long British Pound trade
- If reaction favors buying British Pound, long GBPUSD with two separate position
- Set stop at the near-by swing low/reasonable distance from entry; want at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is hit, set reasonable limit
Bearish GBP Trade: BoE to Preserve Highly Accommodative Stance Throughout 20142013-11-20 09:30 GMT (or 10:30 MQ MT5 time) | [GBP - Bank of England Minutes]
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Bank of England says UK in sustained recovery
The UK is in a sustained recovery and does not face major inflation risks, Bank of England policymakers have said.
Minutes from the Monetary Policy Committee's November meeting showed the nine members all voted to leave interest rates at 0.5%.
2013-11-20 13:30 GMT (or 14:30 MQ MT5 time) | [USD - CPI]
if actual > forecast = good for currency (for USD in our case)
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U.S. Consumer Prices Show Unexpected Drop In October
With energy prices showing a notable decrease, the Labor Department released a report on Wednesday showing an unexpected drop in consumer prices in the month of October.
The Labor Department said its consumer price index edged down by 0.1 percent in October after rising by 0.2 percent in September. The drop came as a surprise to economists, who had expected consumer prices to come in unchanged.
Meanwhile, core consumer prices, which exclude food and energy prices, inched up by 0.1 percent for the third straight month. Economists had expected core prices to rise by 0.2 percent.
2013-11-20 13:30 GMT (or 14:30 MQ MT5 time) | [USD - Retail Sales]
if actual > forecast = good for currency (for USD in our case)
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U.S. Retail Sales Rise More Than Expected In October
Retail sales rose by more than expected in the month of October, according to a report released by the Commerce Department on Wednesday, with the sales growth largely due to a rebound in auto sales.
The Commerce Department said retail sales rose by 0.4 percent in October, while revised data showed that sales were unchanged in September.
Economists had expected retail sales to edge up by 0.1 percent compared to the 0.1 percent drop originally reported for the previous month.
Bigger than Libor? Forex probe hangs over banks
A global investigation into forex trading abuses is the latest legal headache for the banking industry.
The [forex and Libor] benchmarks have a knock-on effect to all of these other markets," Kovel said. Assistant professor of law at Wake Forest University Andrew Verstein agrees.
2013-11-21 09:05 GMT (or 10:05 MQ MT5 time) | [AUD - RBA Gov Stevens Speaks]
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RBA not ruling out intervention on $A
The Australian dollar is higher than it should be and the Reserve Bank of Australia is keeping an open mind about intervening to bring it lower, governor Glenn Stevens says.
Although the RBA has expressed concern about the high Australian dollar, the benefits of intervention do not outweigh the costs at this point, Mr Stevens said in a speech marking the 30th anniversary of the floating of the Australian dollar.
Intervention in the foreign exchange market would involve selling Australian dollars to buy foreign currency.
Mr Stevens said intervention had previously been used to try to avoid the currency moving downwards too quickly, and now that the reverse was occurring, the RBA was keeping its options open.
"Overall, in this episode so far, the bank has not been convinced that large-scale intervention clearly passed the test of effectiveness versus cost," Mr Stevens said in the speech.
2013-11-21 11:00 GMT (or 12:00 MQ MT5 time) | [GBP - CBI Industrial Trends Survey]
if actual > forecast = good for currency (for GBP in our case)
==========
U.K. Manufacturing Order, Production Strongest Since 1995: CBI
Growth in British manufacturing orders and production over the last three months reached the highest since 1995, survey data from the Confederation of British Industry showed Thursday.
According to the Industrial Trends Survey, 36 percent of firms said their total order books were above normal and 25 percent said they were below, giving a balance of 11 percent. It was the highest since March 1995.
Similarly, at 29 percent, the balance for output in the three months to November rose at its fastest rate since January 1995.
European Shares Fall, Asian Market Follows the Trend
As the indications are coming from the Federal Reserve’s last meeting that the U.S. may reduce stimulus in the coming months, European stocks fell to significant levels. The impact is also due to reports that Chinese manufacturing dropped more than forecast. Following the trend in U.S. stock-index futures yesterday and Asian shares also dropped today.
Major Indexes in Europe
All indexes fell to a great extent on the second consecutive days. Whereas the Stoxx Europe 600 Index retreated 0.6 percent and closed at 320.87 at 8:10 a.m. in London, Standard & Poor’s 500 Index futures expiring next month slipped 0.2 percent. Similarly, the MSCI Asia Pacific Index lost 0.6 percent.
Downbeat Asian Market
Manufacturing data going down in China has a great impact on the overall stock market of the region. Today, most Asian stock markets are weaker while emerging market currencies faltered as the dollar charged ahead after the U.S. Federal Reserve’s latest indication that it will taper stimulus to an extent.
Keys to Successful Trading: Matching Personality with Trading Style Part I
Talking Points
NZD/USD 4th Attempt to Separate from .8200
Trading Strategy: This is the fourth attempt to separate from .8200. It’s unlikely that the market holds this time. A short position is likely after some consolidation (and when the opportunity is offered to add to the AUDUSD position).
LEVELS: .8075 .8133 .8168 | .8225 .8257 .8276