Fed Urged to Stay Course

Morning Report: 06.30 London

• This morning sees a continued push to reverse the impact of the ECB’s surprising reserve from last Thursday. The Euro is pulling back slightly again, while the Dollar index builds for the second straight day.            

• The Australian and New Zealand Dollars are experiencing the most forceful selling with the NZD/USD off by around 0.7%.

• Meanwhile, the USD/JPY remains in its prolonged channel.

Coming up today:

• We have Eurogroup meetings running throughout the day.

• The day’s main item is BOE governor Carney speaking at 15.00.

Trade Idea:

• The Euro continues to slip back after Mario Draghi took a slightly harder line than expected with rates and QE activities. Many are urging the Fed to stay strong as well and raise rates as expected this month.

• Although nothing is certain, FOMC chair Yellen has been fairly consistent in preparing markets for a rate hike in December.
                      

A good way to play this situation is a LOWER trade predicting that the EUR/USD will close below 1.0800 in 22 days time for a potential return of 144%.

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