Thereof Dove

November 6, 2015

Thereof Dove:
The Bank of England overnight signalled that interest rates will not be lifted off record low levels any time soon. The Bank of England Monetary Policy Committee voted 1-0-8 (increase-decrease-hold) with Ian McCafferty the only dissenter.

BoE policymakers left rates on hold at 0.50% and even signalled that they aren’t closed to cutting again if the data warrants the move. Yes, this opens up the possibility of negative interest rates.

The bank’s quarterly inflation report released alongside the decision showed positive projections into the new year but at a slow rate and not positive enough to tilt their hand. But it was again global uncertainty that weighed on the BoE and ultimately pushed them towards the dovish release.

GBP/USD 15 Minute:
Click on chart to see a larger view.

As you can see pretty clearly, sellers jumped all over Cable and knocked it down near 200 pips. With any rate increases in the short term off the table, who wants to be long at those prices?



On the Calendar Friday:
AUD RBA Monetary Policy Statement
JPY BOJ Gov Kuroda Speaks

GBP Manufacturing Production m/m

CAD Employment Change
CAD Unemployment Rate
USD Average Hourly Earnings m/m
USD Non-Farm Employment Change
USD Unemployment Rate


Chart of the Day:
With Kuroda on the calendar today, we take a look at USD/JPY as today’s chart of the day.

USD/JPY Daily:
Click on chart to see a larger view.

With today’s daily candle, price has now entered the support/resistance zone that price has previously rejected hard from multiple times. The strength of these rejections is the important factor in making this level key.

On the other hand, it is such a clean level (inside an equally clean range) so there will no doubt be stops sitting just above here. It’s a range, and you have to keep playing the range until it’s not, but fading into the level is the mug’s trade. I like the play where we wait for any stops to be cleaned out above the level before shorting on confirmation that price is going to tuck back into the range.

Do you see opportunity trading Forex?

Dane Williams – @VantageFX

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