FOMC decision and dollar reaction, BoE and other news
The main event of yesterday was undoubtedly the announcement of the outcome of the meeting of the Federal Open Market Operations Committee. The 0.25% cut has "symbolic importance" as one analyst puts it. data from the Fed funds futures market has suggested that for weeks 100% of investors already expected at least that much.
We still do believe that we have to sell the dollar. The reason is the same. We prefer to make decisions based on facts, rather than rumours and expectations. After the Federal Reserve's announcement that it would lower its basic interest rate that is a bearish signal for the dollar. Plus, the Fed announces a plan to end balance sheet runoff well ahead of schedule. Another fact and another signal in favor of dollar sales.
As well as market sentiment has not changed fundamentally even despite the rapid growth of the dollar. More than 80% of traders expect at least the second reduction in the Fed rate in 2019.
Data on GDP and consumer inflation in the Eurozone, which came out in line with our expectations. Note that Eurozone GDP Growth Confirmed at 0.2% So the Eurozone economy continues its unconvincing series of economic data. In this light, we find a very prospective position on the foreign exchange market - sales of EURGBP.
Also yesterday, data on employment in the US from ADP were published. Private payrolls rose 156,000 in July, better than economist estimates of 150,000. On Friday the NFP outlook will be published, so Friday will be an interesting day.
Bank of England meeting results that is what we are waiting for today. Markets do not expect any surprises, which is generally logical. Despite the fact that today the Bank of England will give support the pound, we continue to recommend its purchasing. The motivation is the same - the markets incorrectly assess Brexit situation and its outcome.
Also, pay attention to the data on business activity in the United States.
We sell Russian ruble and oil and buy the Japanese yen.
We still do believe that we have to sell the dollar. The reason is the same. We prefer to make decisions based on facts, rather than rumours and expectations. After the Federal Reserve's announcement that it would lower its basic interest rate that is a bearish signal for the dollar. Plus, the Fed announces a plan to end balance sheet runoff well ahead of schedule. Another fact and another signal in favor of dollar sales.
As well as market sentiment has not changed fundamentally even despite the rapid growth of the dollar. More than 80% of traders expect at least the second reduction in the Fed rate in 2019.
Data on GDP and consumer inflation in the Eurozone, which came out in line with our expectations. Note that Eurozone GDP Growth Confirmed at 0.2% So the Eurozone economy continues its unconvincing series of economic data. In this light, we find a very prospective position on the foreign exchange market - sales of EURGBP.
Also yesterday, data on employment in the US from ADP were published. Private payrolls rose 156,000 in July, better than economist estimates of 150,000. On Friday the NFP outlook will be published, so Friday will be an interesting day.
Bank of England meeting results that is what we are waiting for today. Markets do not expect any surprises, which is generally logical. Despite the fact that today the Bank of England will give support the pound, we continue to recommend its purchasing. The motivation is the same - the markets incorrectly assess Brexit situation and its outcome.
Also, pay attention to the data on business activity in the United States.
We sell Russian ruble and oil and buy the Japanese yen.
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