Gold, Crude Oil Remain Focused on Bernanke Commentary

  Gold, Crude Oil Remain Focused on Bernanke Commentary

Crude oil and gold prices remain focused on Congressional testimony from the Fed’s Ben Bernanke but the central bank chief seems unlikely to break new ground.

Talking Points

• Bernanke Unlikely to Break New Ground in Second Day of Testimony
• Gold, Oil Volatility Risk Tilted to the Upside on Dovish Fed Rhetoric

Commodity prices are trading water ahead of the opening bell on Wall Street as traders await the second half of the semi-annual Congressional testimony from Fed Chairman Ben Bernanke. The central bank chief spoke before the House of Representatives first and is due to face the Senate today. Bernanke was careful to stick closely to a familiar script yesterday, reiterating that the decision to taper asset purchases is dependent on incoming economic data and highlighting the difference between reducing QE and tightening monetary policy.

This time around, the prepared text ought to be effectively the samebut the Q&A session might generate some market-moving headlines. Anything that is perceived as advancing the case for a reduction in QE is likely to weigh on risk-sensitive crude oil and copper prices as well as eroding anti-fiat demand for gold and silver. Bernanke has seemingly gone out of his way to push back against the “taper”-driven volatility generated in the aftermath of June’s FOMC meeting however, suggesting that any discernible lean to be found in his remarks is more likely to be dovish than otherwise. Such a scenario is likely to bode well for sentiment-geared assets and precious metals alike. On balance, the baseline scenario is still for a neutral outing that fails to generate clear-cut directional cues in the immediate term.

Capitalize on Shifts in Market Mood with the BOM Speculative Sentiment Index.

Crude Oil Technical Analysis (WTI) - Prices put in a bearish Dark Cloud Cover candlestick pattern, hinting a move lower is ahead. Near-term support is at 103.93, the 23.6% Fibonacci retracement, with a break beneath that targeting the 38.2% level at 101.78. The bearish candle setup would be invalidated on a close above 107.41, the July 11 high.

Daily Chart - Created Using FXCM Marketscope 2.0

 

Gold Technical Analysis (Spot) - Prices put in a Bearish Engulfing candlestick pattern below resistance at 1297.75, the 38.2% Fibonacci retracement, hinting a move lower is ahead. Near-term rising channel support is at 1260.04, a barrier reinforced by the 23.6% retracement at 1252.80. A break below that aims for Fib expansion support at 1228.00. Alternatively, a move above resistance sees the next upside boundary at 1334.08.

Daily Chart - Created Using FXCM Marketscope 2.0

 

Silver Technical Analysis (Spot) - Prices are consolidating below resistance at 20.22. Near-term trend line support is at 19.18, with a break below that targeting the 23.6% Fibonacci expansion at 18.70. Alternatively, a break above resistance aims for the 38.2% Fib retracement at 20.73.

Daily Chart - Created Using FXCM Marketscope 2.0

 

Copper Technical Analysis (COMEX E-Mini) - Prices are pulling back from resistance at the top of an emerging rising channel to approach support at 3.112, the 38.2% Fibonacci expansion. A break below that targets the channel bottom at 3.054 and the 50% level at 3.024. Resistance is reinforced by the 23.6% Fib at 3.221, with a reversal above that eyeing a horizontal pivot level at 3.270.

Daily Chart - Created Using FXCM Marketscope 2.0

How to Trade Forex after a Major News Release

Article Summary: News trading often brings the biggest moves of the month. Because of this, it’s no wonder that trader’s seek out high importance news events to try and catch a big move. However, if you don’t have a solid plan for trading the upcoming event, you’re likely better off not trading at all. Here is a plan to make sure you’re ready when a big move comes your way.

“Don’t think about what the market’s going to do; you have absolutely no control over that. Think about what you’re going to do if it gets there. In particular, you should spend no time at all thinking about those rosy scenarios in which the market goes your way, since in those situations, there’s nothing more for you to do. Focus instead on those things you want least to happen and on what your response will be.” – William Eckhardt

Have you ever wondered why markets move so much before a news release? Quite simply, it’s because of massive amount of traders are entering or exiting based on the news release and these traders want to do so at the price they feel is best. This causes a relatively large move immediately following a news release.

Now, trading the news is exciting. However, it’s also risky due to the large moves that follow a news release and because of these moves you need to be well prepared ahead of time if you’re interested in trading around big news events. First, it’s important to cover how to know when a big news event is coming out.

Learn Forex: News Events Cause Forex Prices to Fluctuate Greatly

Presented byFXCM’s Marketscope Charts

A Quick Primer on the DailyFX Economic Calendar

The DailyFX Economic Calendar is a key tool to help make you aware of when a High Importance event is coming out like the Federal Reserve Minutes or a Bank of Japan Rate Decision. To find the news that will most likely move the market, you should adjust the filter to only see High Importance events so that your calendar isn’t flooded with news that has little probability in moving the market. Once the filter is applied, you can begin looking for news events on currencies that you’re trying to find good opportunities in.

Learn Forex: DailyFX Economic Calendar Can Help You Be Aware Of Market Moving Events

Courtesy of Dailyfx.com/Calendar

The Two Kinds of News Results You Should Be Aware Of

Now that you know what news events to focus on, you should know that all news releases are not treated equal and you should know the differences. what the expectations for the numbers are. The expectations are important because the market has likely priced in the expectations so that should the news release is exactly at expectations you wouldn’t expect too large of a move. On the other hand , if news releases and the numbers are way out side of expectations, then you will see a massive move in which you should be prepared to trade if this style of trading fits your risk profile.

Whether you’re trading a short-term or longer-term strategy, you need to know how news comes out in regards to expectations. If markets come out in line with expectations then you will approach the set up completely differently than if the release is completely outside of expectations.

Release In Line With Expectations: Locate Key Price Levels to Enter Into a Trade

More than likely, you will see a reaction to the news event even if the numbers come in line. This can be because a flow of orders comes in the moves around prices but regardless of the reason this is your opportunity to have the market prove to you a level of support or resistance. If price touches that important level and holds, you can enter in a way so that your risk is still tight as the market continues business as usual.

Learn Forex: When News Comes Out In Line, Look For a Good Entry on the Current Move

Presented by FXCM’s Marketscope Charts

There are two simple and objective tools you can use to find support or resistance so you can identify a high probability entry off a news event. The first would be Pivot Prices which are objective points of support and resistance based on prior price action. The other tool would be a trendlines which is a manually drawn line connecting price points where the trend continue.

Release Outside of Expectations: Locate Breakout Levels to Enter Into a Trade

Learn Forex: Trendlines Can Help You Catch an Entry as The Next Move Unfolds

Presented by BOM Chat

If a trendline is truly broken, retested and then continues in the direction of the break, you have a clear trade with tight risk. Naturally, a trend line break would most likely happen only on high volatility caused by news coming outside of expectations. When an entry is triggered of such a move, you can place a tight stop below the trendline to prevent you from holding a counter trade if the trend resumes.

Happy Trading!

Edited by Ilesanmi Ogooluwa 

Contact: iogooluwa@gmail.com 

 

US Dollar and Fed Policy - Perception vs. Reality

  US Dollar and Fed Policy - Perception vs. Reality

The US Dollar tumbled in overnight trade after Ben Bernanke clarified the Fed’s intentions to “taper” QE asset purchases. More of the same is expected ahead.

Talking Points

• US Dollar Tumbles as Bernanke Reins in QE “Taper” Speculation
• Buoyant Risk Appetite Points to Continued Dollar Selling Ahead

The US Dollar tumbled in overnight trade, losing as much as 1.5 percent on average against its top counterparts, as Asian markets responded to yesterday’s “dovish” commentary from Federal Reserve Chairman Ben Bernanke. The central bank chief pushed back against speculation about a near-term reduction of QE, reminding investors that the “overall thrust” of policy remains highly accommodative. Bernanke added that inflation and job growth trends signal that more Fed stimulus is needed.

Minutes from June’s FOMC policy meeting seem to illuminate the impetus behind the Fed Chairman’s tone. Officials debated including specific language about the fate of the asset purchase program in the policy statement but ultimately felt it was too difficult to “convey succinctly the desired information.” As such, much of the discussion focused on how Bernanke ought to explain the central bank’s intentions in the press conference following the sit-down, with most participants stressing that he should:

1. Make clear that any changes to the asset purchase program remained highly conditional on an ongoing assessment of the economic outlook.
2. Strike a clear distinction between “tapering” and “tightening”, stressing that there is likely to be a significant time lag between the end of QE and an increase in the benchmark lending rate.

In retrospect, those FOMC members who feared that “stating an intention to slow the pace of asset purchases...might be misinterpreted as…the initial step toward exit from the [Fed’s] highly accommodative policy stance” proved correct.Indeed, the mass liquidation of QE-linked bets in the aftermath of June’s FOMC meeting suggests the markets interpreted the Fed’s posture as having shifted significantly toward the hawkish side of the spectrum.

With that in mind, today’s comments from Mr Bernanke represent not an about-face in the Fed’s thinking but an attempt to realign the markets’ perceptions. The reality of the Fed’s intentions has not changed, but volatility in asset prices since Bernanke spoke shows that the markets’ perception of those intentions is undergoing significant reassessment.

More of the same seems likely to ahead. European shares are on racing higher in early morning trade and S&P 500 futures are up by nearly a full percentage point as traders cheer the prospect of longer-lasting Fed support. A quiet economic calendar offers little that can derail momentum, pointing to continued US Dollar weakness ahead.

Capitalize on Shifts in Market Mood with the DailyFX Speculative Sentiment Index

Asia Session:

GMT	CCY	EVENT	ACT	EXP	PREV
22:30	NZD	Business NZ PMI (JUN)	54.7	-	59.0
22:45	NZD	Food Prices (MoM) (JUN)	2.1%	-	0.3%
23:50	JPY	Machine Orders (YoY) (MAY)	16.5%	3.3%	-1.1%
23:50	JPY	Machine Orders (MoM) (MAY)	10.5%	1.9%	-8.8%
1:00	AUD	Consumer Inflation Expectation (JUL)	2.6%	-	2.3%
1:30	AUD	Employment Change (JUN)	10.3K	0.0K	-0.7K
1:30	AUD	Unemployment Rate (JUN)	5.7%	5.6%	5.6%
1:30	AUD	Participation Rate (JUN)	65.3%	65.2%	65.2%
1:30	AUD	Full Time Employment Change (JUN)	-4.4K	-	-6.8K
1:30	AUD	Part Time Employment Change (JUN)	14.8K	-	6.1K
2:00	JPY	Tokyo Avg Office Vacancies (%) (JUN)	8.46	-	8.33
2:47	JPY	Bank of Japan Rate Decision	0.10%	0.10%	0.10%
2:47	JPY	BOJ 2014 Monetary Base Target	¥270T	¥270T	¥270T

Euro Session:

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
6:00	EUR	German Wholesale Price Index (YoY)	0.7% (A)	-0.1%	Low
6:00	EUR	German Wholesale Price Index (MoM)	-0.4% (A)	-0.4%	Low
6:30	JPY	BOJ’s Kuroda Holds Press Conference	-	-	High
8:00	EUR	ECB Publishes Monthly Report	-	-	Medium

Critical Levels:

CCY	SUPPORT	RESISTANCE
EURUSD	1.2834	1.3128
GBPUSD	1.4900	1.5132

--- Edited by Ilesanmi Ogooluwa, BOM Index analyst

Contact Ogooluwa: iogooluwa@gmail.com

Dollar Breaks to 3 Year High Before Holiday, Taper Market Shakeup

• Dollar Breaks to 3 Year High Before Holiday, Taper Market Shakeup
• Euro Drops Below 1.3000 as Portugal Adds to Growing Crisis Concerns
• Japanese Yen Crosses Advance for the Fourth Day, Capital Flows On Deck
• Australia Dollar Volatility Stirred but Trend Still Illusive after Data Run
• British Pound Advances Despite Business Group’s Call for Stimulus
• US Oil Soars for a Third Day to 14 Month High
• Gold Recovery Stalled by Dollar’s Strong Rebound

Dollar Breaks to 3 Year High Before Holiday, Taper Market Shakeup

The Dow Jones FXCM Dollar Index (ticker = USDollar) rallied above 10,875 this past session to break through to fresh three-year highs. This move is partly attributable to risk trends concerns – the S&P 500 has notably failed multiple times to make progress beyond 1,625 – and also has its contributions from Taper speculation. Yet we shouldn’t let the technical breakout for EURUSD below 1.3000 and USDJPY above 100 lead us to complacency. Trades are made on the follow through, not the breakout. And, the momentum behind a bullish dollar theme is highly circumspect moving forward. Immediately ahead of us, we have a round of notable event risk – ISM service sector activity, ADP employment change and US trade. All notable for a growth update, the former two are also key NFP proxies. The national employment report due Friday presents the first update on a key Fed Taper target (the jobless rate) since the group noted their intention to taper later this year. There will be healthy doses of fear and speculation before the data hits Friday…and before that, we have a liquidity drain for the national holiday.

 

Euro Drops Below 1.3000 as Portugal Adds to Growing Crisis Concerns

The euro was a mixed bag this past session, but the standout move was the EURUSD’s 0.7 percent slide below the support on recent congestion. A strong dollar was certainly a critical aspect of this move, but the euro itself would contribute to the bearish development. For traditional data, the docket was light. The Eurozone factory-level inflation figures did little to alter the assessment of health in the regional economy. Far more important was the spread of the euro crisis fire. While German Chancellor made troubling remarks to suggest Greece may not receive its full €8.1 billion aid tranche by August and that no additional debt cuts would come, the bigger headline was from Portugal. In the wake of the Finance Minister’s resignation just a few days ago, the Foreign Minister announced his exit Tuesday. As cabinet members leave, the coalition government is at very real risk of dissolution. And, a vote will likely find a more desperate nation to vote against austerity.

 

Japanese Yen Crosses Advance for the Fourth Day, Capital Flows On Deck

Over the past two weeks, the yen crosses have climbed between 2.0 (AUDJPY) and 6.7 percent (USDJPY). This clearly speaks to yen weakness rather than coincidental strength from its many counterparts. The correlation between the yen crosses and Nikkei 225 suggests there is an element of ‘risk appetite’ building up the carry position – but it is the return of stability for the local markets that is the more likely explanation for this performance. With the Bank of Japan a constant pressure against the yen, when all else is stable; the crosses will rise. Yet, a quiet backdrop will be difficult to maintain beyond the next 24 hours. With the thin liquidity conditions for Thursday’s session and the global sentiment sparks in Friday’s NFP release, fear and then sentiment winds will overwhelm the slow climb.

 

Australia Dollar Volatility Stirred but Trend Still Illusive after Data RunThe past 24 hours has proven a volatile period for the Australian dollar. With the RBA rate decision carrying the market Tuesday and a round of economic data this morning, there is a considerable amount of volatility. The rate decision – where the central bank held its benchmark rate at 2.75 percent – was most notable for the group’s decision to maintain its ‘scope for further easing’ language and to notably upgrade its assessment of the Australian dollar’s ‘excessive value’. The bank’s statement noted that even after a 10 percent drop, the Aussie dollar was still expensive and likely to fall further. The data this morning seemed to support a curb speculation of further rate cuts with a trade surplus at a 17-month high and retail sales rising, but RBA Governor Stevens would make it a point to reiterate his dovish/bearish outlook.

 

British Pound Advances Despite Business Group’s Call for Stimulus

With the exception of GBPUSD, the sterling put in for a bullish performance this past session. In testimony to Parliament, Bank of England member Tucker offered a dour assessment of economic conditions. Aside from his assessment of a bumpy recovery going forward, the policy maker warned that a help-to-buy program (form of stimulus) was unwise and that recent market volatility was a warning sign. Both a warning and a plea, business group BCC (British Chamber of Commerce) called on the incoming BoE Governor to boost credit through an increase in bond purchases and expansion of the Funds for Lending Scheme. As a balance of market interest, the Treasury auctioned off £3.5 billion in 10-year notes for a higher 2.584 percent yield (previous was 2.365 percent) but better demand (1.76 bid-to-cover versus 1.52 previously). In the upcoming session – the day before the rate decision – we have a BoE credit conditions report and service PMI survey due.

 

US Oil Soars for a Third Day to 14 Month High

US oil – West Texas Intermediate – has soared an incredible 5.6 percent so far this week. With Tuesday’s 1.6 percent jump, the market pushed to a nine-month high. In exceptionally-volatile trade early Wednesday, crude moved to overtake $100 per barrel and test highs not seen since May 2012. The magnitude of the move to multi-month month highs in itself is remarkable, but the heavy overnight activity speaks to exceptional market conditions. Volume on the futures markets showed the market traded around 1 million contracts through the past session – the heaviest trading since February 7, 2012. This isn’t a simple stop-clearing speculative move. Supply concerns are driving this move in the form of unrest in Egypt. Facing threats of a military-led ouster by a Wednesday deadline, Egyptian President Mohammed Morsi rebuffed threats and vowed to stay at the head of the government. In an escalation to the Mubarak protests from 2011, millions of protestors have taken to the street to demonstrate. With Morsi vowing to stay in office and the military threatening intervention, pressure on oil prices will remain.

 

Gold Recovery Stalled by Dollar’s Strong Rebound

An unchecked recovery effort isn’t in the cards for gold. The precious metal closed in the red following the previous two days of hearty rally. The 0.7 percent slip is hardly eye watering; but it steals all the wind from the badly demoralized bulls. Given the extent of the selloff over the past quarter, the fundamental drive to support a rally is far greater than it would be under different conditions. As such, budding troubles in the Eurozone’s periphery, the wealth erosion in higher energy prices and persistent stimulus efforts by global central banks – all weights to traditional currencies – still can’t put the metal on pace. Meanwhile, ETF holdings of the commodity dropped for the 20th consecutive trading session and volume eased back to levels from that preceded the June collapse. 

Edited by Ilesanmi Ogooluwa BOM Index Analyst 

Email: iogooluwa@gmail.com 

A Yearly High in UK Construction Fails to Stop a Pound Tumble

HE TAKEAWAY: UK PMI for construction rises to a yearly high -> Positive economic indicator comes days ahead of Carney’s first BoE meeting -> Pound tumbles along with equities

The UK Purchasing Managers’ Index for construction reached a yearly high of 51.0 in June, but the PMI failed to beat expectations for 51.2 and therefore did not boost the Pound in Forex trading. The construction PMI was reported above the 50.0 neutral line for the second month, following the 50.8 index report in May.

Markit reported that a solid rate of new order growth lead to higher output level, and employment levels in the construction sector rose over the month. Markit also stressed the importance of an upbeat economic release just days before the BoE’s first meeting with Marc Carney as Governor. “The improvement in overall construction output simultaneously raises chances of strong second quarter UK GDP growth, and reduces the likelihood of imminent additional policy stimulus,” said Markit Senior Economist Tim Moore.

However, the Pound declined about 25 points against the US Dollar following the release and fell below the 1.5200 level, likely due to a further fall in European equities, which was also reflected in Euro trading. GBP/USD may find resistance around 1.5150, by a rising trend line from March.

There was little other news during the European session, which saw an announcement of a slight annual decline in Euro-zone producer prices in May.

At the beginning of the European session, the Reserve Bank of Australia left the target rate interest rate unchanged, but drove the Aussie slightly lower with talk of further easing.

(How does a Currency War affect your FX trading? Take our free course to find out!)

GBPUSDDaily: July 2, 2013

 Edited by: Ilesanmi Ogooluwa

----Email: iogooluwagmail.com

US Factory Orders, Fed-Speak in Focus on QE "Taper" Speculation

The spotlight remains on the central macro theme dominating the markets’ attention over recent weeks: the forthcoming “tapering” of Federal Reserve QE efforts. May’s US Factory Orders figure headlines an otherwise lackluster set of scheduled event risk, with economists penciling in a 2 percent increase. That would mark the strongest print in three months, which may bolster the case for a relatively sooner cutback in asset purchases and boost the US Dollar.

“Fed-speak” may undermine anti-QE speculation however as New York Fed President Bill Dudley and Governor Jerome Powell take to the wires. Both were effective at talking down tapering expectations last week and a similar outing this time around may once again prove potent absent heftier offsetting economic news-flow.

The economic calendar is relatively quiet in European trading hours. June’s UK Construction PMI reading is expected to show growth in sector activity accelerated to the fastest in 13 months. The release comes on the heels of a better-than-expected Manufacturing PMI print yesterday and may weigh against expectations of an increase in Bank of England stimulus efforts, setting the tone for this week’s policy announcement and offering a lift to the British Pound.

Separately, Eurozone PPI figures are due to show the year-on-year wholesale price growth rate held steady in May after slipping into negative territory in the prior month. While this hardly enough of a victory for the Euro to celebrate in earnest, the narrow improvement may lend a bit of support to the single currency as prices continue to track investors’ priced-in policy expectations.

Capitalize on Shifts in Market Mood with the DailyFX Speculative Sentiment Index

Asia Session:

GMT	CCY	EVENT	ACT	EXP	PREV
23:50	JPY	Monetary Base (YoY) (JUN)	36.0%	-	31.6%
23:50	JPY	Monetary Base (End of Period) (¥) (JUN)	173.1T	-	159.2T
1:00	NZD	ANZ Commodity Price (JUN)	-3.7%	-	-1.6%
1:30	JPY	Labor Cash Earnings (YoY) (MAY)	0.0%	-	0.0%
4:30	AUD	Reserve Bank of Australia Rate Decision	2.75%	2.75%	2.75%

Euro Session:

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
8:30	GBP	PMI Construction (JUN)	51.2	50.8	Medium
9:00	EUR	Euro-Zone PPI (MoM) (MAY)	-0.2%	-0.6%	Low
9:00	EUR	Euro-Zone PPI (YoY) (MAY)	0.0%	-0.2%	Low

Critical Levels:

CCY	SUPPORT	RESISTANCE
EURUSD	1.2983	1.3085
GBPUSD	1.5184	1.5249

Edited by Ilesami Ogooluwa

Email: iogooluwa@gmail.com

 

Big Week as Risk Trends Settle - RBA, ECB, BoE, and US NFPs On Deck

BIG WEEK AS RISK TRENDS SETTLE-RBA, ECB,BoE AND US NFPs ON DECK

The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) gained +0.79% last week, making its two-week total +3.42%, its best two-week performance since the weeks ending May 10 and May 17 of this year. Needless to say, the world’s reserve currency has seen continued demand following the Federal Reserve’s June 19 policy meeting, with bouts of strength arriving in tandem with surges in US Treasury yields.

For the week ahead, as this theme plays out, there are several ‘high’ ticket events on the economic calendar that are all but guaranteed to produce excess volatility. Of note, there are three major central bank meetings this week, while the first week of the July (as do all first weeks of the month) presents PMI readings from across the globe. But in terms of the Fed – the most important focus right now – the June US labor market release on Friday, despite holiday trading conditions in the US, is the biggest event on the docket.

Rate Hike Probabilities / Basis-Points Expectations


See the DailyFX Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.

07/01 Monday // 14:00 GMT: USD ISM Manufacturing (JUN)

US ISM Manufacturing data as of late has been worrying – prints have been declining every month since February signaling slowed growth (and contraction in May (below 50.0) for the first time since November 2012). Despite the apparent slowdown in manufacturing, it is important to remember that the rest of the US economy is showing signs of continued improvement. Of note, consumption, the greatest slice of GDP (just short of 70%), has retained an upward bias in recent months. Given the recent declining trend, a beat on the headline could prove to be significantly bullish for the USD.

CONSENSUS: 50.5

PRIOR: 49.0

The key pairs to watch are EURUSD and USDJPY.

07/02 Tuesday // 04:30 GMT: AUD Reserve Bank of Australia Rate Decision

Although the key rate was on hold in June, in May, the RBA cut the benchmark rate to a record low 2.75%, a reminder that the rate cut cycle is still very much in the picture. In the June Minutes, the RBA stated, “the exchange rate [has] also depreciated noticeably, though it [remains] at a high level considering the decline in export prices that [have] taken place over the past year and a half.” While we find another rate cut unlikely at present, further dovish guidance is expected, which could weigh further on the AUD, which fell by -4.69% over the past month against the USD through Friday’s close

CONSENSUS: 2.75%

PRIOR: 2.75%

The key pairs to watch are AUDUSD and AUDNZD.

07/04 Thursday // 11:00 GMT: GBP Bank of England Rate Decision

The BoE policy meeting on Thursday will be the first in the post-Mervyn King era, with former Bank of Canada Governor Mark Carney taking the reins. It has been long believed that Governor Carney’s ascension would be a consistent bearish influence on the Sterling, given the fact that from December 2012 through February 2013, on several occasions he suggested that central bank policy hadn’t reached its limit and that additional accommodative policies might warrant a consideration.

With that said, despite the 1Q’13 UK GDP figure missing, Governor Carney is unlikely to implement any material or noteworthy policies at his first meeting this Thursday. As expectations for Governor Carney’s stewardship of the BoE are overall dovish, it is possible that a hold might lead to a brief burst higher for the GBP-based pairs.

CONSENSUS: 0.50%; APT at £375B

PRIOR: 0.50%; APT at £375B

The key pairs to watch are EURGBP and GBPUSD.

07/04 Thursday // 11:45 GMT: EUR European Central Bank Rate Decision

The ECB will decide on Thursday whether to cut its benchmark interest rate even further, past the already record low 0.50%. ECB policymakers have stated hesitance towards cutting this rate and have instead considered implementing a negative deposit rate. In essence, this would charge banks for depositing excess reserves at the ECB which should in turn encourage lending. Theoretically, implementing a negative deposit rate would be bearish for the EUR because it an expansion of money supply causes a currency to devalue. This move, however, is unlikely at the meeting.

CONSENSUS: 0.50%

PRIOR: 0.50%

The key pairs to watch are EURJPY and EURUSD.

07/05 Friday // 12:30 GMT: USD Change in Nonfarm Payrolls and Unemployment Rate (JUN)

June US labor market data on Friday will give the best insight into when QE tapering mightbegin, as the Fed has continuously reiterated the data contingency of its policies. The Fed has been looking for NFP figures around +200K for several consecutive months to kick start the taper, although such a trend hasn’t materialized; since the +332K reading in February, there has not been a single print above +200K. While the June report should show continued modest growth, given the shift in Fed policy leanings towards the belief that the labor market is improving, another NFP figure in the +160K to +180K should be sufficient to spur a stronger USD.

CONSENSUS: +165K; 7.6%

PRIOR: +175K; 7.6%

The key pairs to watch are EURUSD and USDJPY.

 

--- Written by Ilesanmi Ogooluwa, BOM Index Analyst  and Anthony Forex Analyst.

To contact Christopher Vecchio, e-mail iogooluwa@gmail.com

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