LCG Market Analysis

Pound traders watch $1.30 into BoE, QIR

The Bank of England (BoE) policy decision and the Quarterly Inflation Report (QIR) are the major macro events of the day. The BoE is expected to maintain its monetary policy unchanged, to revise its inflation forecast higher due to the significant pound depreciation posterior to the Brexit, yet to remain cautious regarding growth due to looming Brexit risks.

Traders will be watching the 1.30 level, which has acted like a solid resistance so far. It could be a make or break day for Cable.

Most frequently asked question is: Will Cable appreciate past 1.30?

The pound appreciated by nearly 3.80% against the greenback since PM Theresa May announced on April 18 that the UK will hold an early general election in June. The GBP-bulls continue betting that the early election could curb the extremes views in the Parliament, such as UKIP, set aside a part of the hardest Brexiteers and allow the UK to negotiate a smoother Brexit.

On the flip side, the divergence between the Fed, seeking to raise rates and shrink balance sheet simultaneously, and the BoE, hoping to stay as accommodative as possible despite the rising inflationary pressures, is in favour of a relatively stronger US dollar. The key resistance is eyed at 1.3044, the major 38.2% retracement on post-Brexit sell-off. A break above this level should suggest a mid-term bullish reversal in GBPUSD.

It is of course possible for the pound to extend gains above this level, should traders are ready to start unwinding their negative view due to the Brexit.

What could be that extra push for the pound bulls?

Rising inflationary pressures have encouraged Kristen Forbes to vote in favour of an interest rate hike at the latest MPC meeting.

The headline inflation in Britain rose to 2.3% year-on-year in March, highest since September 2013. Yet, the core inflation, excluding food and energy, eased to 1.8% from 2% printed a month earlier. Provided the recent fall in energy prices, a temporary pause in the headline inflation could be reasonable, and refrain the remaining MPC members from joining the hawk’s club this week.

The MPC is expected to vote 9-1 in favour of stable BoE rates. A more hawkish vote count could revive the BoE-hawks and could be the extra push needed for a pound appreciation above $1.30, yet will certainly not change the overall dovish outlook. The market assesses less than 60% probability for a rate hike to happen before the end of 2018.

Large call options are seen at 1.2960 and 1.3000 at today’s expiry. Failure to break above the 1.3000/1.3050 area could trigger a downside correction and encourage Cable to end the week below the 1.29 mark.

Gains in FTSE remained capped at 7380p at today’s open. The strong pound and the $1.30 taboo abstain buyers from entering fresh positions before the QIR.


Click here to read the full article on LCG.com

FTSE above 7400p as pound abandons $1.30

The FTSE 100 found buyers at the Friday’s open, as the Bank of England (BoE) meeting temporarily dented the appetite in the pound market. The temporary pause in GBP appreciation encouraged a recovery above the 7400p. The key resistance stands at 7447p, all-time high.

It seems like the pound traders temporarily abandoned their $1.30 target, after the Bank of England (BoE) Governor Mark Carney said that the ‘low rates are not excessive’, they are ‘appropriate’. He also added that the wages growth is not expected to be ‘especially fast’, which partially explained the expectations of weaker inflationary pressures moving forward. The inflation forecast was revised up to 2.8% from 2.7%, yet forecasted down to 2.4% from 2.6% in the last quarter of 2018, and to 2.2% from 2.4% in the last quarter of 2019. The growth forecast was updated to 1.9% from 2.0% due to slower growth at the beginning of 2017, yet the BoE revised the 2018 and 2019 estimates slightly higher.

[...]

USD traders could regain appetite with data

The USD-bulls were not fully convinced to buy into Federal Reserve (Fed) Rosengren’s suggestion to start shrinking the balance sheet after the next rate hike, which is 100% priced in for June. The lack of appetite was perhaps due to the extremely hawkish nature of the proposition. In addition, economists underlined that allowing maturing assets run off the Fed’s portfolio would cause less than 25 basis points rise according to the latest Wall Street Journal survey.

As such, New York was busy watching developments surrounding the FBI director Comey’s sudden dismissal.

The US stocks traded in the red. The S&P500 wrote-off 5 points, as the Dow Jones retreated to its 50-day moving average ($20’785), where it saw support. The VIX index advanced to the highest level in a week, yet remained comfortably below its historical averages.

There are no signs of stress although the US stocks are set for a negative open in New York. We remind that the S&P500 refreshed record on Tuesday, as markets continued day-dreaming about Donald Trump’s major tax reforms.

The Dow Jones is called 44 softer at $20’875 at the open.

The US inflation and retail sales data are on today’s economic agenda. The retail sales may have advanced to 0.6% in month to April from -0.2%, bringing the monthly headline inflation to 0.2% from -0.3% printed a month earlier. Solid read would give a last push to the USD-bulls before the closing bell, yet we do not expect a significant price action in the US cross-asset markets, unless there is a major surprise in the data.


Click here to read the full article on LCG.com

FTSE renews record on oil, commodities

A massive global cyber-attack hit more than 200’000 computers in 150 countries since Friday. Businesses across all industries are expected to be affected. The UK’s NHS (National Health Service) warned that many of 8000 GP surgeries could be disrupted for the first time.

The risk sentiment is dull due to cyber uncertainties. The bitcoin is exchanged below $1’800, as cyber-attack hackers claim their victims’ payments in bitcoins.

The total value of the bitcoin market hit $50 billion, which raises questions on the sustainability of such an exponential growth in this perfectly deregulated market. Given the size of the recent attack and the widespread implications caused by the use of the decentralized, non-government controlled digital currency, the bitcoin could be the target for new measures and regulations. The bitcoin was worth $10 in 2012.

Gold consolidated gains between $1’227/$1’233 (minor 23.6% retracement on April – May sell-off) and is expected to advance to $1’245/1’247 (major 38.2% retrace / 200-day moving average) on the back of softer US dollar and buoyant risk sentiment. Intra-day support is eyed at $1’227 (100-day moving average).


Chinese equities driven high on Belt and Road

Asian equity markets were driven by quite a few forces; China’s Belt and Road initiative, firmer oil and commodity prices were among the positive catalyzers at the start of the week.


Click here ro read the full article on LCG.com

FTSE at record high even with strong pound

The FTSE 100 renewed record regardless of the pound bulls. The index extended gains to 7480p, as Vodafone (+4.07%) rallied on solid results. The 7500p corner is just around the corner; neither the Brexit worries nor the stronger pound seem to weigh on the FTSE’s positive trend.

The opposition party leader Jeremy Corbyn is expected to unveil his plans today.

easyJet (-5.42%) shares plunged as the airline company reported a record, worse-than-expected first half loss. easyJet’s revenues were severely hit by the pound’s depreciation against the US dollar. However, the GBP-denominated company remained optimistic on its core business growth, the loyalty of its clients and said to invest $3.8 billion in new Airbus SE aircrafts. At her interview, the company CEO Carolyn McCall said that the Bloomberg headlines were ‘exaggerated’, highlighted that the fleet growth is ‘purposeful and strategic’, adding that there future options with Airbus are flexible both on the upside and the downside.

Cable recovered above to 1.2958 prior to the inflation data and is expected to remain well bid on the back of a faster than expected inflation report in April. The UK’s headline inflation advanced to 2.7% versus 2.6% expected, as the core inflation, excluding food and energy, may have bounced to 2.4% for the first time since October 2013.

The $1.30 hurdle is back on the radar. This being said, the rising inflationary pressures revived to a limited extent, given that in its Quarterly Inflation Report, the BoE warned that the inflationary pressures could increase throughout 2017, but should ease starting from next year.


Euro rallies to fresh six-month high

The EURUSD advanced to 1.1036 for the first time since the US presidential election.
The single currency surpassed the post-Macron peak, 1.1023 (post-Macron high), and is set to extend gains toward 1.1074 (minor 23.6% retrace on post-Trump sell-off).


Click here to read the full article on LCG.com

USD appetite hit by US political turmoil

The FTSE 100 first dived to 7489p then rebounded past 7525p at the London open. Fresnillo rallied past 2% as gold extended gains.

Lloyds (+0.97%) shares were well bid, as Britain sold its remaining stake in the bank, emotionally marking the end of a painful, challenging and stressful bailout following the 2007 subprime crisis.

In line with expectations, British wages improved by 2.4% in the three months to April, from 2.3% printed a month earlier. Solid wages growth could translate into higher consumer demand, rising inflationary pressures and increase the hawkish pressures on the Bank of England (BoE). The latter reasoning is GBP-positive. Yet, the 1.30 level against the US dollar remains a solid resistance and a major taboo. Stops are eyed above.


WTI factors in nine-month output cut extension, EIA data in focus

The WTI crude charms top sellers above the 200-day moving average ($49.60). The actual oil prices factor in a nine-month extension in OPEC/Russia production cuts. The market apparently demands more for a sustainable break above the $50 level.

The US oil inventories may have contracted by additional 2.5 million barrels last week. The weekly EIA data is due later in the session and a soft read could give a boost to the energy markets. Top sellers are eyed at $50 and above.


Click here to read the full article on LCG.com

Pound breaks above the $1.30 resistance

The pound couldn’t resist to the 2.3% monthly rise in UK retail sales, versus 1.1% expected and -1.8% printed a month earlier. Cable finally broke above the $1.30 level and rallied on stops to $1.3023.

The key mid-term resistance stands at 1.3040, the major 38.2% retracement on post-Brexit sell-off, if taken out would mark the end of the mid-term bearish trend in GBPUSD.

FTSE opened downbeat; energy (-2.25%), industrial (-1.36%) and mining (-1.10%) sank on the back of de-Trumpflation risks.

The stronger pound should weigh for the UK’s big caps and encourage a further slide toward the 7400p.


Pricing the de-Trumpflation risks

Political tensions in the US are escalating as the FBI persists on deepening the Russian probe investigation. The US Justice Department has named the former FBI chief Robert Muller as the special counsel to investigate an eventual Russian influence on the US’ 2016 election campaign and the outcome. Muller is well respected by both Democrats and Republicans and has been described as an excellent choice for the matter.


Click here to read the full article on LCG.com

FTSE up on firmer oil, soft pound

FTSE opened upbeat as the barrel of WTI trades near the $50 and the pound failed to consolidate gains above the $1.30 level following yesterday’s positive breakout.

Health care (+1.01%) and energy (+0.70%) stocks lead gains in London.
Cable consolidates between 1.2927 and 1.2079, after having slipped below the 1.29 mark on what has been described as a flash crash on Thursday.
The short-end of gilt curve remains too flat to encourage a mid-term positive breakout against the greenback. Failure to break above the major technical resistance could trigger a further pullback in GBPUSD. Short-term supports are eyed at 1.2824 (minor 23.6% retracement on March – May rise) and a distant 1.2687 (major 38.2% retrace).

Euro reverses losses on solid German PPI
The bearish intra-day reversal in EURUSD was due to the broad based USD recovery. EURUSD traded shortly below the 1.1100 mark in Asia, after hitting a fresh post-Trump high at 1.1172 yesterday.


Click here to read the full article on LCG.com

Miners down on Noble, GBP offered

Traders woke up to a risk-off session after an explosion in Manchester Arena killed 22 and injured 59 people. Yen (+0.21%) and gold (+0.18%) rose in Asia, as capital flew into the safe haven assets.

Asian stocks mostly lacked enthusiasm; Nikkei (-0.33%) and Topix (-0.16%) were flat, Hang Seng (-0.12%) reversed earlier gains as Tencent, the main positive driver on the index, turned negative in the afternoon.

The anxiety due to Manchester blast moderated into the European open and had little to no impact on the stock markets trading.

The FTSE 100 lacked direction at the London open. Energy stocks were better bid on earlier gains in the oil markets, yet gave back gains as the barrel of WTI (-0.80%) started leaking. Mining stocks started at the bottom of the range amid an aggressive sell-off hit Noble shares in Singapore and dampened the sentiment across the sector.

BHP Billiton (-1.1%), Anglo American (-1.01%), Rio Tinto (-1.06%), Antofagasta (-0.79%0 and Glencore (-0.66%) were among the leading losers in London.

Softer pound has been mechanically supportive of the FTSE above the 7500p.


Noble tanked on default risks

The commodity trader Noble Group stopped trading after erasing more than 20% in Singapore amid the S&P cut the companies rating by three notches to CCC+, citing that the ‘company’s capital structure is not sustainable’.

The rating agency warned of default risks, as the group could fall short of liquidity to cover its debt by the middle of next year.


Cable capped by thick 1.3044-resistance

Cable remained offered by the $1.30 level. According to the latest ICM poll, PM Theresa May’s lead retreated to 14 points from 20 points a week earlier, as the Labour Party gathered some support thanks to its spending plans on the NHS, social care and tuition fees. Latest ICM results suggest that Tories lost one percentage point support to 47%, Jeremy Corbyn’s Labour Party gained three points to 33%, Liberal Democrats and the UKIP fell by one and two points to 9% and 4% respectively. The Manchester blast could give a hand to Theresa May before the June 8 snap election, given her focus on immigration and borders.


Click here to read the full article on LCG.com

No Greek deal, Fed minutes in focus

The FTSE 100 remained capped below 7500p at the open. The heavy sell-off in commodities following China’s debt rating downgrade has taken its toll on the UK’s mining stocks (-1.10%). Copper futures cheapened by 1.29%, as iron ore future slid more than 5%.

Glencore (-1.70%) warned that there is no certainty regarding the Bunge deal. The deal would increase Glencore’s net debt ratio from 0.6 to 1.2 times the EBITDA according to Barclays’ analysts, which would decrease the probability of a special dividend. To us, it could also interfere with Glencore’s efforts to reduce and restructure its debt.

On the other hand, firmer oil prices gave a little boost to BP (+0.32%) and Royal Dutch Shell (+0.28%) shares before May 25th OPEC meeting. With the support of Iraq and Russia, the OPEC is expected to extend the supply cuts by another nine months. The barrel of WTI trades above $51.40. Resistance is eyed at $53/55.

Cable failed to clear the mid-term resistance at 1.3044, which stands for the major 38.2% retracement following the Brexit sell-off. The lack of conviction for a mid-term bullish reversal in the pound against the greenback hints at a deeper downside correction. The next supports stand at 1.2824 (minor 23.6% retracement on March – May rise), 1.2750 (50-day moving average) and 1.2687 (major 38.2% retrace).

Marks & Spencer (-1.24%) fell on disappointing results. M&S’s home and clothing sales fell by 5.9% in the fourth quarter, versus -3.7 expected by analysts. The company said that 2017/2018 clothing & home space sales should decline by 1-2% and the gross margin should be +25 to -25 basis points. On the other hand, the FY adjusted profit before tax beat estimates, as company printed GBP 613.8 million versus GBP 596 million forecast. The company said that the cash generation reduced debt by GBP 204 million. The final FY dividend is announced at 11.9p per share.


Euro falls on no Greek deal

The EURUSD bounced back from 1.1268 yesterday and extended weakness to 1.1171 in Frankfurt.

The Eurozone officials and the IMF failed to reach an agreement on the Greek debt relief. Northern European nations refused to sign off the third bailout without the IMF participation, and that despite the Greek efforts for additional pension cuts and tax increases. The IMF partaking could, according to the opponents, bring some thoroughness to the deal.


Click here to read the full article on LCG.com

UK growth slows, oil tumbles on Saudi

Cable bounced back from 1.3015, as the UK revised its 1Q growth estimate a touch lower than expected. According to the second GDP estimate, the British economy may have expanded by 0.2% quarter-on-quarter versus 0.3% expected previously. This would mean a yearly growth at 2.0% versus 2.1% printed earlier.

The biggest highlight of the GDP revision has certainly been the unexpected 1.6% decline in 1Q exports, versus a sharp reversal in imports to 2.7% from -1.0%. Larger government spending and improved business investment couldn’t compensate the import-export gap.

The FTSE 100 stagnates near the 7500p level, as all eyes are on the OPEC meeting, in Vienna.


WTI tumbles as Saudi says 'no need for deeper cuts'

A group of twenty-four OPEC and non-OPEC nations meet in Vienna today and are expected to prolong their production cuts by nine more months to sustain the oil prices

The barrel traded just shy of $52 before tumbling toward the $50 level as Saudi said there is no need for deeper cuts.

Provided that the prices already include nine-month extension and perhaps the possibility of a positive surprise, a nine-month extension per se will likely not be sufficient to push the prices higher. Support to the downside correction stand at $50.01 (minor 23.6% retracement on May rise triggered by OPEC speculations), $49.85 (200-day moving average) and $48.85 (major 38.2% retrace, which should distinguish between the continuation of the OPEC-based positive trend and a short-term bearish reversal due to an eventual disappointment).


Click here to read the full article on LCG.com

Pound falls, as UK’s May loses support

The pound (-0.49%) has been the biggest G10 loser against the US dollar as PM Theresa May's lead fell by five points according to the latest YouGov poll.

Cable retreated to 1.2861 in London.

The UK will hold a snap general election in less than two weeks and the political uncertainties should further weigh on the pound following its recent failure to clear the critical mid-term resistance at 1.3044 (major 38.2% retracement on post-Brexit sell-off) against the US dollar.

Cable is set to extend weakness to 1.2824 (minor 23.6% retracement on March – May recovery) and 1.2688 (major 38.2% retrace).

The EURGBP has taken over the 0.8700 resistance. There is no obvious obstacles before the next target at 0.8784 (50% retracement on October – April decline).

The FTSE 100 stocks are slightly positive on the back of a softer pound. Gains could remain limited however, as energy stocks may dampen the mood.


WTI dives 5% post-OPEC statement

The WTI crude tanked more than 5%, as the OPEC extended the production cuts by nine months as expected. The goal is to bring the oil inventories below the five year average into March 2018.


Click here to read the full article on LCG.com

Gold up, FTSE down on strong pound

The FTSE 100 opened downbeat on stronger pound. Mining and energy stocks opened flat to positive, although the Qatar isolation and cheaper oil prices keep investors tense and gains fragile.

Gold miners diverge positively as the waning risk appetite pushes the price of an ounce to highest levels since mid-April.

Randgold Resources (+1.47%), Fresnillo (+1.23%)


Softer the Brexit, stronger the pound

The GBPUSD remains well bid ahead of the UK’s snap election due on Thursday, although most of the pound’s strength is certainly due to the broad based weakness in the US dollar.

The short-term volatility in pound is attention-grabbing and should prevent Cable from any major directional move before the result of the election.

According to the latest polls, the Conservatives’ lead on Labour fell to nearly 1% (41.5% versus 40.4%) from about 20% at the time of the election announcement. We remind that the poll was conducted before the latest terrorist attack in London Bridge, and could be readjusted in favour of Tories. Nonetheless, the rapid fall in Conservatives’ popularity hints at a potentially hectic pound market into and after the election.


Click here to read the full article on LCG.com

Sentiment mixed before busy Thursday

The European equity markets opened flat to negative on Wednesday, following a quiet trading session in Asia. Investors will certainly remain in wait-and-see mode before Thursday’s busy eco-political agenda including former FBI director Comey’s testimony, the UK snap general election and the European Central Bank (ECB) meeting.

The big story of today is Banco Popular’s take-over by Santander amid the EU’s Single Resolution Board said that the bank will likely be bankrupt. Banco Popular lost more than 50% in a week.

Santander shares (-3.00%) sold aggressively to €5.60 at the open on surprise news. Popular’s riskiest bonds fell near zero and the legal costs will not be included in structuring costs, which may increase the investor anxiety vis-à-vis the deal.

On the other hand, Popular’s take-over could provide interesting business extension opportunities for Santander, especially in the SME-lending and credit card fields. Bad loans and the real-estate exposure that have irremediably weakened Popular’s capital have already been taken into account in the value of the deal.

Santander will seek to raise 7 billion euros to complete the transaction and Popular is said to continue operating under ‘normal business conditions’ once the transaction is done.

European banks started the day under pressure following the Banco Popular take-over.

The FTSE 100 traded mixed at the London open. Energy stocks (+0.16%) recovered on improved oil prices. Mining (-0.49%) and healthcare stocks were offered at the early minutes of trading.

The WTI crude gained more than $1/barrel, as the American Petroleum Institute revealed that the crude inventories contracted by 4.62 million barrels last week. This is the fifth consecutive week of fall in US crude inventories. The EIA’s weekly report is due today and is expected to confirm the falling inventories. Analysts expect 3.1 million barrel contraction last week, versus -6.4 million printed a week earlier.

Click here to read the full article on LCG.com

Pound, FTSE holding breath as UK votes

The election polls in the UK have been hectic, as PM Theresa May’s Tories lost their popularity meaningfully during the recent weeks.

According to the latest YouGov poll, the Conservatives’ lead widened 7 points to 42% against the Labour, which could gather 35% of voters’ support at today’s snap election.

To us, it is likely that the Conservatives walk out with a slim majority. If this is the case, Cable should remain ranged between 1.28/1.30 area.

A strong majority for Tories could send the GBPUSD above the solid 1.3045 mid-term support (major 38.2% retracement on post-Brexit sell-off).

On the other hand, a hung Parliament will certainly trigger significant capital outflows from the UK assets, but still is expected to be less harmful for the pound than a Labour win. In this context, an unexpected and sudden shift to the Labour Party would change the Brexit dynamics completely and push the political environment in the UK to a complete unknown. The GBPUSD could sell-off below the 1.25 mark. Banks and financials could suffer the most in case of a Labour majority.


Click here to read the full article on LCG.com

GBP tanks post-election, FTSE up

The result of the UK snap election has been dramatic for Theresa May, who was seeking a larger majority for Tories when she announced a snap general election in mid-April. May’s Conservatives obtained 306 seats, far behind the 326 seats necessary for majority. The Labour Party displayed a surprisingly solid performance with 258 seats.

Not only the UK citizens refused to further back up Theresa May’s Party, but the election results point at a hung Parliament, which will of course do all but smoothen the formal Brexit negotiations with the EU due to begin this month. Some already call for Theresa May’s resignation before or during the weekend, others believe that she may not last beyond two to three months.

The pound was again squeezed heavily. Cable plunged to 1.2636, as the EURGBP jumped to 0.8859. From a technical point of view, the GBPUSD broke below the critical 38.2% Fibonacci retracement on March – May rise, 1.2688, suggesting a mid-term bearish reversal. On the topside, the minor 23.6% retracement level, at 1.2824, provided the first resistance. Political uncertainties could further weigh on the pound during weeks ahead. The next important levels stand at 1.2578 (50% retracement) and 1.2515 (200-day moving average).

The FTSE 100 (+1.21% strengthened on the back of a weakened pound. All sectors, except financials (-0.09%) opened upbeat. Industrials (+2.08%) and mining stocks (+1.81%) lead gains in London.

However, the political uncertainties are expected to weigh on investor sentiment once the pound related rally is exhausted. Big banks called for lower allocation in the UK stocks in the dirt of political visibility.


Click here to read the full article on LCG.com

FTSE, GBP heavy as May faces Tory MPs

The UK struggles with rising political uncertainties after Theresa May lost majority in June 8 snap general election. According to latest news, the PM’s office admitted that she hasn’t reach a deal to govern with a Northern Irish party last week (Bloomberg), but the Northern Irish unionists are still open to talks with May to give her support eventually (Reuters).

It looks like Theresa May is not ready to resign after her failed election gamble, yet the tensions are rising at the heart of the Conservative Party. Theresa May will face the committee of Conservative MPs today to discuss about the tragic election outcome and could well be brought to resign against her will.
According to the Telegraph, the former Chancellor Osborne said that May is a ‘dead woman walking’ and more importantly, that several MPs hinted at a leadership coup by summer time.

The truth is, her undesirable resistance in power could further damage the Tories’ image for the future elections, a situation which will certainly disturb many party members and pave Theresa May’s way toward the exit door.

Meanwhile, the official Brexit talks should start this month and give the EU a stronger hand in negotiations. The hard- Brexiteers are now in a weaker position.
The GBPUSD started the week better bid on rising hope that May would now see a decent opposition to her hard-Brexit plans. But the downside risks prevail and prevent the pound from a meaningful recovery.


Click here to read the full article on LCG.com

BoE-hawks retreat on weak wages growth

The pound reversed earlier gains as the growth in average earnings contracted to 2.1% year-on-year in Mya versus 2.4% expected by analysts. Slower wages growth combined with a fast rising inflation means gradually lower purchasing power for British households. This is why, the gap between the wage and price inflation should translate into a slowdown in inflationary pressures, as expected by the Bank of England (BoE).

The pound reversed earlier gains on softer than expected labour data. The GBPUSD remained capped below 1.2800, as the EURGBP rebounded higher from 0.8765.

Now, the attention shifts to the MPC (Monetary Policy Committee) meeting due tomorrow.

The balance between the hawkish and the dovish MPC members will be the main highlight for the pound traders.


Click here to read the full article on LCG.com

Market Snapshot video: EURGBP & gold setups

Soft retail sales hit GBP, BoE in focus

The UK retail sales, excluding auto fuel, contracted by 1.6%, worse than -1.0% expected by analysts and 2.0% printed a month earlier.

Cable retreated to 1.2704 posterior to the data.

The pound traders continue swinging up and down on major political developments posterior to last week’s problematic snap election in the UK and a busy economic calendar.

The weakness in today’s retail sales print, following Tuesday’s solid inflation and Wednesday’s soft wages growth data, inclined the market in favour of a softer pound.

The Bank of England (BoE) meets today and is expected to maintain the status quo. The BoE’s task is hard and the decision is delicate. The BoE is willing to keep the loose monetary conditions to give support to the British economy through the Brexit period. Yet unfortunately, the rising inflationary pressures have become a severe threat to the BoE’s mid-term policy outlook.


Click here to read the full article on LCG.com

Dow Jones preparing to renew record

Appetite in the US stocks remains intact in the aftermath of the Fed rate hike.

Wall Street rolling index traded at fresh all-time highs, up to $21’405, hinting at another day of record.

The S&P500 and NASDAQ futures are up by 0.7% and 0.25%.


Yen-bears in charge as BoJ maintains status quo

The Bank of Japan (BoJ) maintained its policy unchanged at today’s meeting. It appears that the BoJ will remain well behind its leading G10 peers to exit the monetary stimulus, given that the inflation isn’t rising at a desired pace although the output gap tightens.

The USDJPY advanced to 111.27 in Tokyo, as the US dollar broadly pared the post-FOMC losses. The concrete divergence between the Fed and the BoJ policy should encourage a further upside move to 111.40 (50-day moving average), 111.65 (100-day moving average) and 112.05/112.13 (200-day moving average & 38.2% retrace on January – April slide).


Click here to read the full article on LCG.com