• Bank of England governor Mark Carny put a rocket under the British pound in a speech yesterday. The key message was: “This decision [to raise interest rates] is becoming more balanced. It could happen sooner than markets currently expect”. Markets had already been pricing in a rate hike by 2015, build up to a 2% rate by 2017, but yesterday’s announced caused may to revise their expectations and speculate on an early 2015/ late 2014 rate hike. Quote how large this rate rise might be is unclear, especially with other central banks now making ‘baby steps’ with 0.10% incremental changes instead of the regular 0.25%.
•The GBP/JPY jumped higher by 0.60%, the GBP/USD by 0.30% and the EUR/GBP extended its recent down swing.
• Elsewhere, the stock market bull run, continued to peel back, with the S&P 500 suffering its worst fall in more than a month yesterday.
• The dollar index is also slipping back again, in part as a reaction to to the flood of money heading into the British pound. This money flow is helping commodities to keep up their recent recovery.
• The yen pairs are also having a strong day after the BOJ press conference early this morning.
Coming up today:
• Coming up today we have a series of light European economic items at 10.00 including UK CB leading index.
• Following this at 13.30, we have Canadian Manufacturing sales and US PPI. Preliminary UoM consumer sentiment rounds off the week at 14.55.
Trade Idea:
• After Carney’s comments, is an early UK rate hike fully priced into the British pound already? Probably, but that doesn’t mean we can’t still see a short term pop higher.
How Far Will Carney Go?
Morning Report: 08:45 London
• Bank of England governor Mark Carny put a rocket under the British pound in a speech yesterday. The key message was: “This decision [to raise interest rates] is becoming more balanced. It could happen sooner than markets currently expect”. Markets had already been pricing in a rate hike by 2015, build up to a 2% rate by 2017, but yesterday’s announced caused may to revise their expectations and speculate on an early 2015/ late 2014 rate hike. Quote how large this rate rise might be is unclear, especially with other central banks now making ‘baby steps’ with 0.10% incremental changes instead of the regular 0.25%.
• The GBP/JPY jumped higher by 0.60%, the GBP/USD by 0.30% and the EUR/GBP extended its recent down swing.
• Elsewhere, the stock market bull run, continued to peel back, with the S&P 500 suffering its worst fall in more than a month yesterday.
• The dollar index is also slipping back again, in part as a reaction to to the flood of money heading into the British pound. This money flow is helping commodities to keep up their recent recovery.
• The yen pairs are also having a strong day after the BOJ press conference early this morning.
Coming up today:
• Coming up today we have a series of light European economic items at 10.00 including UK CB leading index.
• Following this at 13.30, we have Canadian Manufacturing sales and US PPI. Preliminary UoM consumer sentiment rounds off the week at 14.55.
Trade Idea:
• After Carney’s comments, is an early UK rate hike fully priced into the British pound already? Probably, but that doesn’t mean we can’t still see a short term pop higher.
A Good way to play this is a ONE TOUCH trade predicting that the GBP/USD will TOUCH 1.7075 by Monday’s close for a potential return of 156%.
This is presented as an idea to stimulate fixed odds financial betting ideas and is not financial advice.
Summary:
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