Daily Headline Jaw-boning

January 12, 2016

Daily Headline Jaw-boning:
There are two major headlines flicking through our News Terminal screens today, with the first continuing to keep China in the news and the second back with our old friend the Fed.

Speaking at a briefing at the Chinese consulate in New York yesterday, this came from the deputy director of China’s office of the central leading group for financial and economic affairs, Mr Han Jun:

“Betting against the Yuan will fail and calls for a large depreciation are ridiculous as policy makers are determined to ensure the currency’s stability.”

“It is pure imagination that the Chinese Yuan will act like a wild horse without any rein.”

“Selling short the Yuan “will not succeed.”

“A decline of that magnitude is impossible.”

Oh, this is going to end well…

USD/CNH Daily:
Forex chart, USDCNH Daily, 160112
Click on chart to see a larger view.

Well these comments combined with a higher midpoint at yesterday’s fix did help temporarily halt the currency’s rapid depreciation against the US Dollar. With USD/CNH starting to go a little parabolic, the pull-back also coincided with the top of projected channel resistance after running parallels from the bullish trend line that we already have in place.

The real question becomes how long can intervention and jaw-boning continue to fight the market tide?

Atlanta Fed’s Lockhart

Speaking at the Rotary Club of Atlanta in Georgia, Atlanta Fed President Dennis Lockhart spooked the market with some dovish comments of his own, including:

“How much will we know about inflation trends or inflation developments going into the mid-March meeting? We will have some data but not a great deal more.”

You can read the full speech on the Federal Reserve Bank of Atlanta website, but this is the section that has traders talking. Whether it’s actually anything new, I’ll let you make up your own mind.


Chart of the Day:
To be quite honest, I’m sick about talking about healthy stock market pull-backs as catastrophes, and want to get back to some bread and butter Forex charts sitting at quality levels to manage your risk around.

GBP/USD Daily:
Forex chart, GBPUSD Daily, 160112
Click on chart to see a larger view.

Flicking through the Forex majors and the Cable daily chart was the one to catch my eye. Price tested and chopped through its previous swing lows from back in April 2015, now sitting just below the level.

I’m inclined to lean to playing this chart from the long side, treating the choppy break of support as confirmation that the level isn’t black and white and actually more of a weekly support zone which we are only just heading into. The fact that price hasn’t cleanly broken the level makes me think that the weak stops below the level were cleaned out and now we’ll get a chance to use it as place to buy on any re-test.

Are you trading Cable? Share a chart and idea with @VantageFX on Twitter.


On the Calendar Tuesday:
JPY Current Account

GBP Manufacturing Production m/m
JPY BOJ Gov Kuroda Speaks

GBP BOE Gov Carney Speaks

Do you see opportunity trading Forex on MT4? Take a look at the Vantage FX MT4 platform and instantly access your own free $50,000 FX demo account.

Dane Williams – @VantageFX

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