Pound Falls As BoE Split On Interest Rate

Trading 07 nov 2019 Commentaire »

The pound slipped against its key counterparts in the European session on Thursday, after the Bank of England kept the benchmark rate unchanged and indicated willingness to cut rates in future against the backdrop of rising challenges from Brexit and weaker global economy.

At the rate-setting meeting, the Monetary Policy Committee, governed by Mark Carney, voted 7-2 to maintain the bank rate at 0.75 percent.

Jonathan Haskel and Michael Saunders sought a quarter-point reduction to ensure a sustained return of inflation to the target.

The committee led by Governor Mark Carney unanimously decided to retain the stock of corporate bond purchases at GBP 10 billion and government bond purchases at GBP 435 billion.

The committee judged that the existing stance of monetary policy is appropriate. Monetary policy could respond in either direction to changes in the economic outlook in order to ensure a sustainable return of inflation to the 2 percent target, the BoE said.

"If global growth failed to stabilize or if Brexit uncertainties remained entrenched, monetary policy might need to reinforce the expected recovery in UK GDP growth and inflation."

Data from the Lloyds Bank subsidiary Halifax and IHS Markit showed that UK house prices dropped at a slower pace in October.

House prices fell 0.1 percent in October from the previous month, when prices were down 0.4 percent.

The currency depreciated against its key counterparts in the Asian session, excep the euro.

The pound was 0.5 percent lower at a 2-day low of 0.8645 against the euro, following a gain to 0.8602 at 3:15 am ET. At Wednesday's close, the pair was valued at 0.8608. Extension of the pound's downward trading may lead it to a support around the 0.88 region.

Data from Destatis showed that Germany's industrial production declined more than expected in September. It fell 0.6 percent month-on-month in September, reversing a 0.4 percent rise in August. Economists had forecast a moderate drop of 0.3 percent.

The pound lost 0.5 percent to a 9-day low of 1.2809 against the greenback, after rising as high as 1.2878 at 5:00 am ET. The pound-greenback pair had finished deals at 1.2855 on Wednesday. Should the pound falls further, 1.24 is possibly located as its next support level.

The U.K. currency dipped 0.6 percent against the franc, touching a 2-week low of 1.2705. This followed a high of 1.2787 seen at 5:00 am ET. At yesterday's close, the pair was trading at 1.2762. Further decline may lead the pound to a support around the 1.23 area.

The pound pulled back to 139.75 against the yen, not far from a 9-day low of 139.49 it touched at 10:30 pm ET. The pound was trading at 140.08 per yen at yesterday's close, and is poised to challenge support around the 136.5 mark.

In economic releases, U.S. consumer credit for September will be released in the New York session.


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U.S. Jobless Claims Drop More Than Expected To 211,000

Trading 07 nov 2019 Commentaire »

First-time claims for U.S. unemployment benefits fell by more than expected in the week ended November 2nd, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims slid to 211,000, a decrease of 8,000 from the previous week's revised level of 219,000.

Economists had expected jobless claims to dip to 215,000 from the 218,000 originally reported for the previous week.

Meanwhile, the Labor Department said the less volatile four-week moving average crept up 215,250, an increase of 250 from the previous week's revised average of 215,000.

The report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, edged down by 3,000 to 1.689 million in the week ended October 26th.

The four-week moving average of continuing claims came in at 1,686,750, unchanged from the previous week's revised average.

Last Friday, the Labor Department released a separate report showing much stronger than expected U.S. job growth in the month of October.

The Labor Department said non-farm payroll employment climbed by 128,000 jobs in October compared to economist estimates for an increase of about 89,000 jobs.

The report also showed substantial upward revisions to job growth in September and August, with revised data showing employment jumped by 180,000 jobs and 219,000 jobs, respectively.

With the upward revisions, employment gains in September and August combined were 95,000 more than previously reported.

Despite the stronger than expected job growth, the report said the unemployment rate inched up to 3.6 percent in October from 3.5 percent in September. The uptick matched economist estimates.

The unemployment rate crept up from the nearly 50-year low hit in the previous month as a 325-person jump in the size of the labor force more than offset a 241,000-person increase in the household survey measure of employment.


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Bank Of England MPC Split 7-2 On Rate

Trading 07 nov 2019 Commentaire »

The Bank of England left its interest rate unchanged in a split vote as two members sought a rate cut as growth outlook weakens amid Brexit uncertainty and signaled that a rate hike is unlikely.

Seven members of the Monetary Policy Committee including Governor Mark Carney voted to maintain the bank rate at 0.75 percent, while Jonathan Haskel and Michael Saunders preferred a quarter-point reduction.

Haskel and Saunders said some extra stimulus was needed now to ensure a sustained return of inflation to the target.

Signaling policy easing, the monetary policy summary said, "If global growth fails to stabilise or if Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected recovery in UK GDP growth and inflation."

However, the bank said if risks do not materialize and the economy recovers as projected, then some moderate tightening at a gradual pace and a limited extent may be needed.

The committee unanimously decided to retain the stock of corporate bond purchases at GBP 10 billion and government bond purchases at GBP 435 billion. The committee judged that the existing stance of monetary policy is appropriate.

If Brexit is delayed, or a deal does little to assure businesses, a rate cut will be the next move, Andrew Wishart, an economist at Capital Economics, said.

James Smith, an ING economist said it is too early to be penciling in policy easing just yet as a lot depends on Brexit and new forecasts are not as dovish as expected.

Policymakers forecast economic growth to be roughly half that in 2018. In the new Monetary Policy Report, the bank forecast GDP forecast of 1.2 percent in 2020 and 1.8 percent in 2021, which was down from 2.3 percent.

The bank projected GDP growth to pick up from 1 percent in the fourth quarter of 2019 to 2.1 percent by the end of 2022. The level of GDP ends the forecast period around 1 percent lower than in August.

Over the remainder of the forecast period, demand growth is expected to outstrip the subdued pace of supply growth, which is restrained to some extent by the adjustment to new trading arrangements with the EU, the bank said.

Inflation which is currently below 2 percent is expected to decline to around 1.25 percent by the spring. Then inflation is forecast to rise gradually to a little above 2 percent target.


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U.S. Weekly Jobless Claims Drop More Than Expected

Trading 07 nov 2019 Commentaire »

First-time claims for U.S. unemployment benefits fell by more than expected in the week ended November 2nd, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims slid to 211,000, a decrease of 8,000 from the previous week's revised level of 219,000.

Economists had expected jobless claims to dip to 215,000 from the 218,000 originally reported for the previous week.

Meanwhile, the Labor Department said the less volatile four-week moving average crept up 215,250, an increase of 250 from the previous week's revised average of 215,000.


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*U.S. Initial Jobless Claims Drop To 211,000 In Week Ended 11/2

Trading 07 nov 2019 Commentaire »

U.S. Initial Jobless Claims Drop To 211,000 In Week Ended 11/2


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USDJPY confirms cloud support and bounces to new higher highs

Trading 07 nov 2019 Commentaire »

USDJPY remains inside a bullish channel and making higher highs and higher lows. Trend is clearly bullish as we explained in previous analysis. Today we see why price bounced off 108.65 to new short-term highs.

analytics5dc44f3d30335.png

Green lines -bullish channel

So far USDJPY has respected the lower channel boundary. Price has remained inside the bullish channel and that is another reason why we remained bullish as well. Price is making new higher highs but we have a slight bearish divergence in the Daily RSI.

analytics5dc44fb3dbeda.png

Orange rectangle - support

USDJPY pulled back towards the tenkan-sen (red line indicator) and held above it. Price bounced off this support area and is making new highs. In Ichimoku cloud terms trend remains bearish and today's low is important for the short-term trend and could be used as stop from traders.

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EURUSD continues lower as price breaks 1.1070 support area

Trading 07 nov 2019 Commentaire »

EURUSD remains in a short-term bearish trend. Price is now below Fibonacci support at 1.1070 and I expect price to move towards 1.1020-1.10 as we explained in our last analysis yesterday.

analytics5dc44de488486.png

Green lines - bullish channel (broken)

EURUSD is breaking below the 38% Fibonacci retracement and is approaching our next target at the 50% retracement at 1.1020 area. However the next most important Fibonacci level is at 1.0993 at the 61.8% Fibonacci level. Bulls will try and stop the decline around 1.10 I believe and not sooner. Traders wanting to go long need to be very patient now as we could see much lower levels. The RSI is far from oversold. Trend remains bearish.

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You shouldn’t be surprised with Gold’s break down

Trading 07 nov 2019 Commentaire »

In our last analysis we mentioned that Gold was most probably back testing the break down area. Breaking below $1,490 was a bearish sign and we considered yesterday's bounce to $1,493 from $1,479 as a back test that would be followed by a rejection.

analytics5dc44cc3aead8.png

Orange rectangle -resistance

Green line - important trend line support now resistance

Gold price is making new lower lows. Trend remains bearish and so do we as long as price is below $1,520-25. I have said this many times. The fact that price has tested $1,525-20 several times and it did not break above it has a twofold meaning. First resistance is very important in that area. Second, this is a bearish sign. Inability to break resistance combined with a break below $1,500 were clear bearish signs. Breaking below the green trend line support confirmed our bearish view. Now that price back tested the trend line that it broke and got rejected, we see lower prices as we previously said. $1,460 was our first support area and we are now very close. Trend remains bearish as long as price is below $1,493 and I expect to see lower levels towards $1,440. The RSI provides confirmation for the new lows, so no warning signs from this oscillator.

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Bank Of England Policymakers Split On Rates

Trading 07 nov 2019 Commentaire »

The Bank of England maintained its key interest rate unchanged on Thursday but two members sought a rate cut.

Seven members of the Monetary Policy Committee voted to maintain the bank rate at 0.75 percent, while Jonathan Haskel and Michael Saunders preferred a quarter-point reduction.

Haskel and Saunders said some extra stimulus was needed now to ensure a sustained return of inflation to the target.

The committee led by Governor Mark Carney unanimously decided to retain the stock of corporate bond purchases at GBP 10 billion and government bond purchases at GBP 435 billion.

The committee judged that the existing stance of monetary policy is appropriate. Policymakers forecast economic growth to be roughly half that in 2018.

The bank projected GDP growth to pick up from 1 percent in the fourth quarter of 2019 to 1.6 percent by the end of 2020, and 1.8 percent by the end of 2021, and 2.1 percent in 2022.

In the MPC's latest projection, the level of GDP ends the forecast period around 1 percent lower than in August.

Inflation which is currently below 2 percent is expected to decline to around 1.25 percent by the spring. Then inflation is forecast to rise gradually to a little above 2 percent target.


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*Pound Slides To 2-day Low Of 0.8638 Against Euro

Trading 07 nov 2019 Commentaire »

Pound Slides To 2-day Low Of 0.8638 Against Euro


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