Barclays Pushes Back Its BoE Rate Hike Call From Q2 To Q4 '16 - General

thenews 2016.01.14 20:13 #21

Barclays Pushes Back Its BoE Rate Hike Call From Q2 To Q4 '16

In light of easing economic activity, an absence of domestic inflationary pressure and an amplification of downward global risks, in addition to timing risks associated with the EU referendum,we push back our call for a rate hike by the Bank of England from Q2 to Q4 16. We acknowledge downside risks to our call, and hence cannot rule out a scenario whereby the BoE does not hike at all by year end.

In our new scenario, the pace of the hiking cycle would be 25bp every six months, allowing the BoE to gather sufficient information and reassess its stance between hikes. We acknowledge, though, that the pace of the cycle is highly uncertain, and the MPC may well adjust it as events unfold, despite its apparent commitment to hike rates “gradually”.

Uncertainties regarding the date and the outcome of the EU referendum present further significant risks to the timing of the lift-off and the path for interest rates. We believe a first rate hike before the referendum takes place is unlikely.

We expect the assessment in the February inflation report to help underpin valuations in the short end of the curve as the diminished prospects for imminent tightening are effectively validated. We are likely reaching the limits to how far the first hike is pushed out as, historically, this peaked at 18 months in Q1 15 just as the oil price first declined sharply.

Our revised timing of BoE lift-off continues to represent upside risks to our GBP view in the context of extremely dovish market pricing, which suggests the first rate hike will not occur until May 2017. We expect further weakness of GBP against the USD but not the EUR by year-end.

source

Bank of England Minutes Executing Trades - Trading Labor Productivity - Canada

thenews 2016.01.18 12:33 #22

Buy SEK, EUR, GBP And Sell NZD, USD, AUD This Week - G10 FX Scorecard

This week the scorecard recommends buying SEK, EUR and GBP while selling NZD, USD and AUD(see suggested weights in portfolio in table below).

Last week’s signals resulted in a 1.5% loss as the Scorecard was caught on the wrong leg in the negative risk environment. The long CAD position was particularly expensive, while the short NZD position was the only position that returned a profit.

The next scorecard signals will be sent out on 25 January 2016.

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Close By - Trade Close By - Trade Testing Visualization - Algorithmic

thenews 2016.01.19 06:18 #23

USD/CAD: Next Target, EUR/USD: Channel Limit, USD/JPY: Neckline - SocGen In an accelerated up move, USD/CAD has achieved its advocated target of 1.45 after breaching above a massive upward channel, notes SocGen Techs.

"In the process the pair has confirmed a double bottom and has crossed above ultimate retracement level (76.4% at 1.45) of 2002-2007 down move. Projected target for the pattern stands at 1.59/1.62 which also corresponds with 2002 highs.

If we drop down to daily chart, the pair has broken above a multi month ascending channel which points towards continuation in up move. The pair is likely to head higher initially towards 1.4690 with next target 1.4945/1.50, a projection for the up move. Monthly RSI is now testing a graphical ceiling which suggests possibility of retracement once 1.4945/1.50 levels are achieved.

Short term pullback is likely to be cushioned at 1.42 while multiyear channel at 1.38/1.3760 will be a key support," SocGen projects.

Turning to EUR/UD, SocGen thinks that a break above the short term descending channel limit around 1.1060/85 would decide if the current recovery extends.

"EUR/USD has been tracing a H&S at pivotal support of 1.05, confluence of multi-decade channel and down sloping one since 08.

The pair faced resistance at highs of March’15 at 1.1060/85 where it is forming the right shoulder of a H&S. Only a move above will indicate possibility of further rebound," SocGen adds.

Fianlly in USD/JPY, SocGen thinks that the pair is approaching towards neckline of weekly H&S pattern around 116.

"After facing resistance at multiyear trend (126), USD/JPY is evolving within a H&S formation. The pair recently violated multi month channel and is approaching towards neckline at 116.

A break below will confirm a deeper correction towards September 2014 highs of 110 with intermittent target at 114. 123.70 should cap upside," SocGen argues.

source

Parabolic SAR - Trend Parabolic SAR - Trend Parabolic SAR - Trend

thenews 2016.01.20 06:18 #24

EUR/USD, GBP/USD, NZD/USD: Next Targets - UOB EUR/USD: Neutral: Still neutral but upside risk is increasing.In line with our expectations, EUR/USD traded mostly sideways for the whole of last week. That said, short-term upward momentum is picking up and the current consolidation will be likely resolved by a move higher in EUR. However, only a daily closing above the major 1.0990/95 resistance would indicate the start of a bullish phase. Overall, unless there is a move back below 1.0800 in the next few days, the risk is clearly greater on the upside.

GBP/USD: Bearish: Focus is on 1.4100.As highlighted in recent updates, 1.4228 is a strong support and a break of this level could lead to acceleration lower in GBP. We have seen a low of 1.4130 so far and from here, the focus is firmly on 1.4100. Below this support, the most obvious support will be at 1.4000 but we are seeing a very strong support further down at 1.3960. Overall, there is no sign that the current down-trend is going to end any time soon.

NZD/USD: Bearish: Break of 0.6380 targetsd a move to 0.6300 next. Instead of slowing down, the NZD down-trend accelerated lower and as mentioned previously, a break below 0.6380 would target a move to 0.6300 next. In other words, the current bearish phase is still healthy.

Parabolic SAR - Trend Parabolic SAR - Trend Parabolic SAR - Trend

thenews 2016.01.21 05:58 #25

EUR/USD: 2 Levels To Watch; GBP/USD: Temp Low In Place - UOB EUR/USD: Neutral: Confirmation of a sustained directional move is only upon a break below 1.0800 or above 1.0990. The recent build-up in the short-term upward momentum fizzled out with the rapid drop from the high of 1.0975 yesterday. It appears that EUR is still trapped within a 1.0800/1.0990 range for now. That said, the current neutral phase that started about two weeks ago appears to be close to completion but confirmation of a sustained directional move is only upon a break below 1.0800 or above 1.0990.

GBP/USD: Bearish: Temporary short-term low in place, only break below 1.4125/30 would indicate start of the next leg lower. GBP eked out a fresh low of 1.4125 before rebounding strongly. A temporary short-term low is likely in place but as long as the current stop-loss at 1.4305 (lowered from 1.4350) is intact, further GBP weakness cannot be ruled out just yet. That said, 1.4125/30 is a strong support now and this level has to break to indicate the start of the next leg lower.

source

Parabolic SAR - Trend Parabolic SAR - Trend Parabolic SAR - Trend

thenews 2016.01.22 14:25 #26

Is Selling GBP Like Catching A Falling Knife? How To Trade It? - SocGen Sterling inertia: negative factors worsening, no catalyst for a bounce.

The GBP depreciation gained momentum this week when Mark Carney surprised the market with very dovish talk, signalling that the first rate increase is still a long way off. The market reaction is astonishing, since rates markets do not discount a BoE hike before mid- 2017, but it certainly sanctioned the lack of stability of the central bank in its communication of policy prospects. The GBP/USD remained closely tied to the short-term interest rates differential (Graph 2), so that monetary policy expectations are the key driver.

As underlined by our FI strategists, "the dovishness of the MPC is expected to contrast with a more hawkish Fed approach and should be a key driver of UK front-end outperformance versus the US". While cable is trading at historical lows, there is still room for lower GBP short rates, with the 2Y rate which traded nearly 20bp lower in 2013 (Graph 3).

Shortly after Carney’s speech, the unemployment rate dropped for the first time to pre-crisis levels (5.1%). But that won’t fuel any GBP recovery, as the currency weakened regardless of the steady unemployment fall. However, the rate of regular earnings growth continued to drop, keeping wage inflation under pressure. In addition, medium-term fundamentals are still undermined by the twin deficits. This plainly justifies leaving accommodation in place for longer.

Brexit polls remain as uncertain as ever, leaving intact the risks of a large political disruption. Again, this is not new. However, the referendum may take place earlier than expected, with a possibility for a vote as soon as June. According to Bloomberg, “ministers have calculated that the referendum could be held as soon as four months after an agreement” at the EU summit on 18-19 February. Bringing forward the referendum date would keep the GBP under pressure.

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