*Good morning/afternoon everyone!* The U.S. dollar is trading lower against most of the major currencies this morning as risk appetite improves after yesterday’s brutal selling. Stock futures are up, helping to bolster pairs like EUR/USD and USD/JPY. However as we begin the NY session, the decline in Treasury yields could also tip the scale and push USD/JPY lower. Yen crosses on the other hand will take their cue from stocks today. The currency most vulnerable to weakness is the Canadian dollar because oil prices are down more than 2% after President Trump tweeted that he hopes Saudi Arabia and OPEC will not cut oil production because he thinks oil prices should be much lower based on supply. Despite a softer Eurozone ZEW survey, EUR/USD is trading above 1.1250 on the hope that progress could be made on the Italian budget front. the expectations component of the ZEW surely also increased. The best performing currency this morning is sterling which is up on higher wages (despite a higher unemployment rate) and continued Brexit optimism. On the Brexit front, we are getting closer to a deal but with some counterproductive headlines, traders are still reluctant to overload sterling positions but when an announcement is made, we can almost be assured that there will be a strong followup rally. AUD and NZD are also up from yesterday but having risen strongly in Asian trade, they are mostly consolidating and even weakening slightly. We also have our eyes on the Swiss Franc which appears to be topping below 1.0130. *The MAIN THEMES I see today are* +EUR +CHF -CAD -JPY *Trading Biases* +EUR, +CHF, +GBP, -CAD, -JPY mildly +AUD, +NZD, -USD *Today’s Initial Trades* Here’s the summary – 1. Buy EURCAD at 1.4885, Stop at 1.4857, Target 1.4912 2. Buy EURUSD at 1.1247, Stop at 1.1219, Target 1.1275 3. Buy AUDCAD at .9531, Stop at .9503, target .9559 4. Sell AUDCHF at .7270, Stop at .7298, Target .7242

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower against most of the major currencies this morning as risk appetite improves after yesterday’s brutal selling. Stock futures are up, helping to bolster pairs like EUR/USD and USD/JPY. However as we begin the NY session, the decline in Treasury yields could also tip the scale and push USD/JPY lower. Yen crosses on the other hand will take their cue from stocks today. The currency most vulnerable to weakness is the Canadian dollar because oil prices are down more than 2% after President Trump tweeted that he hopes Saudi Arabia and OPEC will not cut oil production because he thinks oil prices should be much lower based on supply. Despite a softer Eurozone ZEW survey, EUR/USD is trading above 1.1250 on the hope that progress could be made on the Italian budget front. the expectations component of the ZEW surely also increased. The best performing currency this morning is sterling which is up on higher wages (despite a higher unemployment rate) and continued Brexit optimism. On the Brexit front, we are getting closer to a deal but with some counterproductive headlines, traders are still reluctant to overload sterling positions but when an announcement is made, we can almost be assured that there will be a strong followup rally. AUD and NZD are also up from yesterday but having risen strongly in Asian trade, they are mostly consolidating and even weakening slightly. We also have our eyes on the Swiss Franc which appears to be topping below 1.0130.

*The MAIN THEMES I see today are*

+EUR
+CHF
-CAD
-JPY

*Trading Biases*

+EUR, +CHF, +GBP,
-CAD, -JPY
mildly +AUD, +NZD, -USD

*Today’s Initial Trades*

Here’s the summary --

1. Buy EURCAD at 1.4885, Stop at 1.4857, Target 1.4912
2. Buy EURUSD at 1.1247, Stop at 1.1219, Target 1.1275
3. Buy AUDCAD at .9531, Stop at .9503, target .9559
4. Sell AUDCHF at .7270, Stop at .7298, Target .7242

Will BoE Send GBP Soaring Higher?

Will BoE Send GBP Soaring Higher?

Chart Of The Day

Will BoE Send GBP Soaring Higher?

Everyone should be watching the GBP/USD the next 24 hours because not only does the Bank of England have a monetary policy announcement but they will also release their Quarterly Inflation Report in which there could be significant revisions to their latest growth and inflation forecasts. Today, sterling traded very strongly against the U.S. dollar on the back of healthier data and if the BoE sounds optimistic, we could see the pair hit 1.4800. However handicapping the bias of the BoE is difficult because while we’ve seen a lot more improvement than deterioration in the U.K. economy since the last monetary policy meeting with the PMIs, inflation and unemployment rate improving, earlier this month Bank of England Governor Carney expressed concerns about inflation and growth and his sentiment could be reflected in the Quarterly Inflation Report. This report also looks back further than the past month and if we take a 3 month perspective, conditions have certainly weakened and lower forecasts are necessary. Since it is hard to gage the central bank’s tone, trades are best taken after the BoE rate decision.

Technically today‘s rally in GBP/USD has taken the currency pair out of a 2 week long consolidation. The pair broke above the 23.6% Fibonacci retracement of the June the January decline and is closing in on the 50-day SMA near 1.4725. That would be the initial target for a post BoE rally in GBP/USD. If the BoE is dovish, we expect GBP/USD to sink to at least the Fib level at 1.4523 and then possibly even 1.44.

GBP/JPY – Another Push Higher Likely

GBP/JPY – Another Push Higher Likely

Chart Of The Day

GBP/JPY – Another Push Higher Likely

We believe that GBP/JPY will be headed higher this coming week because we are bullish GBP and we are bullish USD/JPY. There’s a tremendous amount of data scheduled for release from the U.K. including for the first time ever – the simultaneous release of the BoE monetary policy decision, MPC minutes and the Quarterly Inflation Report. Forty five minutes later, BoE Governor Carney will hold a press conference similar to the one that ECB President Draghi holds after his meetings. Given recent comments from U.K. policymakers, we believe that the risk will be to the upside for the pound because the central bank is moving closer to raising interest rates. Across the pond, investors love U.S. dollars and as long as Friday’s non-farm payrolls report is decent, it should be enough to lift the greenback. The hawkishness of the Bank of England and the Federal Reserve should take GBP/JPY above 194.

Technically, GBP/JPY is consolidating between 191.70 and 194.40. If it breaks to the upside and we think it will, it should be a clear shot to the June highs. After that, 200 is in focus because not only is it a key psychological level but also the 61.8% Fibonacci retracement of the 2007 to 2011 decline. However if GBP/JPY breaks below 191.70, it could sink down to 190 at which point there is a risk of a double top. With that in mind we don’t think the uptrend will break.