CURRENCY strategy ANALYSIS & TRADE journals FRIDAY 08 /8/2014 FUNDAMENTAL OUTLOOK GBP/USD: "It seems certain some members of the MPC (monetary policy committee) are moving closer to the time when we could well get a split vote...when the minutes are released in a couple of weeks we may well see some evidence of dissent starting to appear" - Michael Hewson, senior market analyst at CMC Markets Just like their European colleagues, the BoE policymakers decided to leave the benchmark interest rate untouched. However, unlike the ECB, debate over interest rate hike is heating up among the Monetary Policy Committee members. Central bankers also agreed to keep the overall volume of its asset purchases at 375 billion pounds. Britain's strengthening economy, which grew an annualized 3.2% in the second quarter, means the BoE is on course to be the first of the world's major central banks to lift interest rates from historic lows. Investors expect officials to begin raising the benchmark rate either at the end of 2014 or early next year. Sustained growth caused unemployment rate falling; nevertheless, policy makers have stressed they are intended to keep rates on hold until there is evidence Britain's economy is reaching full strength and inflationary pressures are increasing, with annual inflation being slightly below the BoE's 2% goal at 1.9% in June. While the International monetary Fund foresees the U.K. to be the fastest-growing developed economy this year, the Bank of England will release its updated economic forecast next week. The Sterling was unchanged versus the U.S Dollar, trading around its previous close at $1.6847, as the outcome was in line with market expectations. TECHNICAL ANALYSIS GBP/USD: . "There's no question, this tells us the labour market is weak" - Paul Bloxham, HSBC chief economist While increasing participation rate considered to be a good sign for economy, it could also send a country's unemployment rate to new highs. Thus, Australia saw its jobless rate jumping to the highest level in 12 years, largely due to a rise in a number of people, who are actively looking for work. According to the Australian Bureau of Statistics, seasonally adjusted unemployment rate came in at 6.4%, 0.3 percentage points higher than a month earlier, with the participation rate increasing by 43,400 to 64.8% compared with 64.7% in June, whereas 300 positions were lost from the economy. It is the first time since 2007 that Australia's unemployment rate has been higher than the U.S., which currently stands at 6.2%. The worse than expected data lowers expectations of a near-term interest rate lift as the nation's economy shows signs of weakness. Nevertheless, the headline jobless figure might be exaggerating the labour market weakness, as other employment indicators show companies hiring intentions improve. Earlier this week the RBA Governor Glenn Stevens said, after keeping the cash rate unchanged at ultra low level of 2.5%, that there has been some improvement in the labour market outlook, but he stressed that it would probably take some time before jobless rate fall consistently. The Aussie Dollar slid to the lowest level in two months versus the Greenback following the release of downbeat employment data, with AUD/USD hitting 0.9263. FUNDAMENTAL OUTLOOK USD/JPY: "Sterling's direction is "broadly moving sideways but if we get better U.S. numbers out over the next couple of weeks, that's going to be more of a driver - how much dollar enthusiasm there is out there." - HSBC (based on Bloomberg) Pair's Outlook As implied by the near-term technical studies, the British Pound continues to cede ground against the Dollar. The closest support that may bring relief is 1.6768/33, which mainly consists of the monthly S1 and 200-day SMA. A little lower, standing next to 1.67, is the May low, which is also likely to interfere and make it difficult for the bears to push the price South. Accordingly, a risk of a pull-back is presently increasing. ECONOMIC EVENTS prev forecast GMT 8:30 GBP Total trade balance GMT 12:30 CAD net change in Employment -9.4K 24.0K CAD unemployment Rate 7.1% 7.1% TREND THE NEWS: 12:30 GMT CAD Employment change Prev -9.4k Forecast 25.4k Deviation 25k (Buy CAD @ 50.4k / SELL CAD @ 0.4k) CAD unemployment rate Prev 7.1% Forecast 7.1% Trade plan: Worse news release SELL CAD/JPY BUY USD/CAD GOOD news release BUY CAD /JPY SELL USD /CAD DAILY CHART ANALYSIS (1) GBP/USD currency pair: Ichimoku trend system signals a BEARISH MARKET weak range. (2) AUD/USD; currency pair ichimoku trend system signals BEAR MARKET with weak range 4HOURLY CHRT ANALYSIS: GBP/USD currency pair: Ichimoku trend system signals Mid- DOWNTREND CONTINUATION AUD/USD currency pair: ichimoku trend system signals mid downtrend continuation Trade expectation: Uptrend (40pips) (30pips) Downtrend continuation (50pips) (35pips) (1) 1 HOURLY CHART ANALYSIS AND TRADE EXECUTIONS Current position GBP/USD SHORT POSITION (50PIPS) AUD/USD:Ichimoku trend system signal downtrend continuation SHORT POSITION (35PIPS) GBP/JPY SHORT POSITION (GBP/USD ▼ usd/JPY ▼) 50pips REFERENCE: HOLY GRAIL A. The trend is your friend B. Buy the dips and sell the rally C. Be disciplined with Good psychology D. Buy the bull and sell the bear E. Don’t demand money from the market F. Do the right plan, allow the market to play and pay G. Take profit and stop loss H. Trading system application and proper risk management I Definite learning curve
