Today we are looking to buy GBP heading into the jobs numbers. This is on the back of hawkish BOE comments and positive expectations for average earnings. Take a look at my weekly Forex news events overview here to learn more about interpreting average earnings data.
This is a higher risk trade as the jobs figures could also cause a sell-off but sterling may appreciate into the event. Look to buy GBPCAD or GBPJPY at market. For a lower risk trade enter after the release. Stops should be tight heading into the numbers. GBPCAD longs can be held into the BOC rate decision.
Sterling was the notable outperformer yesterday as flat CPI was shrugged off and Carney’s hawkish comments gave the currency a substantial boost. Later in the NY session we saw more hawkish comments, this time from soft-dove and MPC member David Miles. He said that waiting too long to raise rates would be a mistake. A hawkish comment from a dovish member is significant and will add to bullish sentiment on pound heading into the jobs numbers today.
In today’s Asia-Pacific session, data from China slightly beat expectations with GDP coming at 7% versus 6.9% and Industrial Production at 6.8% versus 6% expected. Good Chinese data is positive for the AUD and the currency rallied 50 pips against the greenback. However the long-term fundamentals are keeping any rallies in the pair capped.
The Bank of Japan kept monetary policy unchanged and provided no major surprises to the market. The Bank said that the economy continues to recover moderately and they lowered their forecasts for CPI and GDP in 2015, 2016, 2017. The lowering of CPI forecasts may suggest that they are beginning to doubt the economy’s ability to reach the goal of 2% inflation by mid-2016. This opens the possibility that they will adjust this inflation target timing later, into 2017 and perhaps also add to their stimulus program. We will be monitoring the situation.
We will be monitoring levels of support and resistance in unison with any impactful news and the underlying fundamentals in order to find a high probability trade. Support and resistance includes previous highs and lows (horizontal s/r), trendlines, moving averages, fibonacci retracements, daily pivot levels and round numbers. These levels of support and resistance are most effective when there are several of them converging at the same area (confluence).
Other Market Moving News:
Today is a big day of events with UK Employment, the BOC Rate Decision and Press Conference, a speech from Yellen, GDT Price Index and finally, in early Asia, CPI from New Zealand.
To get daily market insights from Jarratt Davis delivered to your inbox simply enter your name and email below:
Source:: Buy GBP – Forex Trading Tips