It looks like a a couple of major currencies have been dancing to Taylo Swift’s new single, “Shake it Off” as both the FOMC in the US and BoE in the UK signaled about decisions on their rates.
Bank of England (BoE)
The big news in the London session was that of the Bank of England’s split rate decision, which means that pressure is growing from within for Mark Carney and co. to begin to normalize rates. The two dissenters in the group, Martin Wheale and Ian McCafferty, are known to be the more hawkish members of the committee so it was little surprise that it was these two, but this is the first time since 2011 that the vote hasn’t been unanimous. Both McCafferty and Wheale believe that the current state of UK PLC is strong enough to cope with a rate rise and that as wage growth is a big concern, they should get on with hiking now and let earnings catch up down the line. Other members may struggle to get on board with a rate hike though, with inflation coming under pressure recently.
FOMC
Ms. USA aka US dollar was pretty happy yesterday as the Fed meeting minutes revealed that policymakers were actually thinking of hiking interest rates earlier than expected. Well, I mean some memebrs said so, while just like the BoE some other members said they would prefer to see more consistent data but admit they were impressed by July’s employment numbers.
Ms USA Dancing Up
After the minutes of Fed talk was released, US dollar gained energy against all her major counterparts and made us some delicious pips!!
Elsewhere in the world
- Concerns are growing over Ukraine’s economy and what may happen if the current situation remains.
- Japanese flash manufacturing PMI climbed from 50.5 to 52.4
- Brazil has made further alterations to its banks’ reserve requirements, freeing up another $4.5bn worth of investable cash. The move comes as the economy continues to struggle with low growth and high inflation, but also with a presidential election around the corner, the timing is pretty convenient.
- Mr. Aussie Dollar fell after poor Chinese manufacturing data.
Upcoming Today
The European data sheet was pretty long today in the London session, with European manufacturing and services PMI numbers, as well as UK retail sales and public sector borrowing. Starting off the New York session is US jobless data, manufacturing data and home sales.
The biggest buzz in the forex world though is the Jackson Hole Summit that is set to take place starting Thursday to Saturday this week. Market participants are expecting to hear clearer clues from Fed head Jannet Yellen on US interest rate hikes.
What is the Jackson Hole Summit all about, you ask? Do the world’s financial leaders literally get together in a hole once a year? Well, kind of. The symposium is held in a ski resort in Jackson Hole to discuss current economic issues, potential action steps, and their global outlook. This annual forum has been held since 1978 and has been sponsored by the Federal Reserve Bank of Kansas.
Technical Analysis
GBP/USD made us pips and continues down!
Invest Diva Likes: More down moves with 1.6500 and 1.6300 as targets.
If pair goes nuts: A break above 1.6900 and above the Ichimoku cloud would change our outlook to bullish with first alternative target set at 1.71
What’s up on the forex dance floor: After making us pips as predicted on previous Invest Diva episodes at 1.6650, the pair continues to dance below its support level and Ichimoku cloud, with momentum on the downside.
Supports and Resistances
1.71
1.6900 Pivot Point
1.6650 Previous Target Reached
1.6500
USD/JPY Made Us Pips and continues to the Upside!!
Invest Diva Likes: More up moves towards 105 in a long run
If Pair Goes Nuts: Below 61% Fibonacci level at 100, look for more down moves towards 97
What’s up on the Forex Dance Floor: We entered the market at 50% Fibonacci level at 101.045 and yesterday reached our first target at 103.92. the pair remains above the Ichimoku cloud and currently teasing the support level at 103.92.
Supports and Resistances
105
103.92 Previous Target Reached
101.04
100 Pivot Point
AUD/USD Created a New Support Level on 4 Hour Chart?
Invest Diva Likes: More down moves with with 0.9243 and 0.9210 as targets
If Pair Goes Nuts: Above 0.9330 look for a rise with 0.9390 and 0.9433 as targets
What’s up on the Forex Dance Floor: The pair tested the 0.9243 level and moved back up immediately creating a new support level. However Mr. Aussie remains below the Ichimoku cloud and below resistance level with the RSI in the neutrality area.
Supports and Resistances
0.9433
0.9390
0.9330 Pivot Point
0.9242
EUR/USD 4-hour: Downtrend.
Invest Diva likes: Short positions below 1.3424 with targets at 1.300 and 1.3120 in extension.
If pair goes nuts: Above 1.3424 look for further upside with 1.3520 and 1.3637 as targets.
What’s up on the forex dance floor: The pair is dancing on an overall downtrend and currently rebounding from the Bollinger’s lower band, remaining below the Ichimoku cloud. So after a pullback up, we could expect more down moves.
Supports and resistances
1.3637
1.3520
1.3424 pivot point
1.300
USD/CHF 4-hour: Move down.
Invest Diva likes: Short positions below 0.9112 with targets at 0.905 and 0.9013 in extension.
If pair goes nuts: Above 0.9112 look for further upside with 0.9130 and 0.9155 as targets.
What’s up on the forex dance floor: The pair is on an uptrend around a previous previous top. The RSI has come back below the overbought zone, and we could see a rebound to the downside soon.
Supports and resistances
0.9155
0.9130
0.9112 pivot point
0.9050
GBP/JPY 4-hour: Mixed signals.
Invest Diva likes: Long positions above 172.38 with targets at 172.78 and 173.28 in extension.
If pair goes nuts: Blow 171.98 look for further downside with 171.48 and 170.67 as targets.
What’s up on the forex dance floor: The pair broke over the Ichimoku cloud and teasing the registance level. RSI is reaching the overbought zone.
Supports and resistances
173.28
172.78
172.38 pivot point
171.48
170.67
Long term traders. Don’t sweat the small losses and look at the big picture. Short term traders,
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