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We were expecting another quiet morning yesterday because of the event risk in play and that is exactly what we got. There was a pop during comments made by Fed Chair Elect Powell, as his comments did signal to the market that there may be an interest rate hike in December, this makes the Yellen testimony later tonight a little more interesting. Some other big news flow to filter through last night is that it is becoming increasingly likely that Congress will pass the tax bill, this bill may not be in the form that the White House were looking for but it will be seen as a win – just to get something through the Senate and to get on the scoreboard will feel massive for them.
There were rumours last night that the UK had agreed on a settlement figure with the EU and this was GBPUSD supportive as the pair rallied 175 pips and ended the day trading around 1.3380. We have already started to hear rumours that these reports are not entirely accurate and so the pair may start to drift for now. The pair is now trading near the top of the recent range and with the 50% fib looming I find it interesting that cable found resistance at the previous high. This is possibly where sellers are building offers, I have said all along that I would treat any pop as a reason to short and so I will be looking for reasons to fade last night’s move.
The USDCAD came under a little bit of pressure yesterday as the BOC dropped a few hints that they will take a wait and see strategy on the economy, this usually suggests that there will not be an interest rate hike anytime soon. The pair added 50 pips on the day and at 1.2820 looks to be printing an attractive shorting opportunity, the daily chart is what is throwing me off – given that OPEC are meeting today, I would be inclined to look for opportunity elsewhere today.
Sometimes, the best trade you take is the one where you sit out the market, and this is what we saw yesterday. I honestly believe that this is the same scenario today, I touched on it yesterday, but my strategy is to assume I won’t trade until Thursday – this allows me to see only obvious opportunity. I know that patience will be rewarded this week.
Market Insight Commentary – Forex
In the Zone
- GBPUSD
- USDCAD
- USDJPY
Market Insight Commentary – Indices
Important Economic Data out today
15:30 USD GDP
Consensus: 3.3%
Effect: Actual higher than expected is good for the USD
16:00 GBP BOE Carney Speaks
Consensus: None
Effect: More hawkish than expected is good for the GBP
17:00 USD Fed Chair Yellen Testifies
Consensus: None
Effect: More hawkish than expected is good for the USD
17:30 USD Crude Oil Inventories
Consensus: None
Effect: No consistent effect on the USD
Noteworthy News
- OPEC meetings today may affect the oil price, there are rumours surfacing that the members are supporting a supply cut extension through 2018 which should support the oil price.
