GBP Services PMI http://www.forexfactory.com/images/m...act_medium.gif 57.2 57.6 57.6
GBP PMI had no effect on the market.
GBP PMI had no effect on the market.
Cable Update - Continued 102 replies
Cable (GBPUSD) vs Euro (EURUSD) 31 replies
Cable Update (GBP/USD) without Idiots 23 replies
Why is GBPUSD called cable? 66 replies
cable short for gbpusd? 6 replies
DislikedSame thing happened with USD.
Last year, everytime USD raised rates, USD weakened against the other currencies (check my historic charts).
It appears that Interest Hike and Currency strength are "inversely proportional"!Ignored
Disliked“Dow 14,000?”
The headline on Barron’s this week follows on from the financial newspaper’s prescient prediction that the Dow would hit 13,000, and suggests that the bulls on Wall Street are still hopeful about corporate prospects.
But as stock markets across the globe head ever higher, so the signs for the global economy worsen. Last week, US GDP growth was far lower than expected for the first quarter, coming in at just 1.3%, the weakest in four years, compared to the 1.7% forecast by analysts.
But never mind – if things get too tough, the Federal Reserve will just slash interest rates. Won’t it?
Everyone is relying on the Federal Reserve to come to the rescue and slash interest rates if the US economy does indeed look as if it’s heading into recession.
But this won’t be easy. The dollar set a fresh all-time low against the euro just last week, falling to $1.37 against the European currency. Bear in mind, this is at a time when it looks like the eurozone’s commitment to a single currency is heading for its first real test - the public in both Spain (where house price growth is slowing) and Ireland (where house prices are now actually falling) are about to find out the downside of living in countries which are unable to set their own interest rates - so for the markets to be putting more faith in Frankenstein money than the world’s reserve currency says something disturbing about the dollar.
If US interest rates fall, so too will the dollar - and that means more inflationary pressure, as the falling greenback makes imports more expensive.
But it’s not just about the dollar. On top of that, the cost of living is rising. As we’ve mentioned before, the next big inflation threat - the ’new oil’, if you like - is going to be rising food costs. Bedlam Asset Management has just put out an excellent report on this.
The group points out that in real terms, the price of food has fallen by 80% over the last 30 years. But “it must be expected that basic food prices must double in the next five to ten years” which would only take them back to “half their historic average”.
There are several trends driving this - America’s wasteful use of food (corn) to produce ineffectual biofuels such as ethanol, rather than importing the far more efficient sugar-based variety from Brazil; the fact that the world’s population is becoming larger and wealthier, and thus demanding more from their meals; and changing weather patterns.
None of these problems are insoluble, says Bedlam – but it will take a “surprise crisis” as they put it, for action to be taken. And “in the meantime, investors should expect much higher food prices and shortages, for these structural imbalances are a new long-term trend.”
So the Fed is still caught between a rock and a hard place on interest rates, and Ben Bernanke knows it, which is why he keeps treading a tightrope whereby he constantly leans against market expectations; highlighting inflationary pressures when Wall Street is positive a rate cut is just around the corner.
As James Ferguson recently wrote “Every US macro economist out there is adjusting their economic models from slowdown to recession – or at the very least a near-miss.”
Bernanke knows tough times are coming - he’s just hoping to ease us into them, rather than precipitating a full-scale panic.Ignored
When it comes to charts, no one is better qualified in UBS than Peter Lee,
Chief Technical Analyst in UBS. So I asked him for his view on a Dow 14,000.
First he chuckles, telling me that I shouldn't pay too much attention to the
newspapers, which were making much ado about nothing. Then, becoming
more serious, Peter explains that the Dow is not the right index to focus on.
The S&P500 is much more representative of what is happening in the US
market. And this index hasn't yet broken its all-time high of 1,553.11,
reached intraday on March 24, 2000. Peter believes this, although only
around 4-4.5% above the S&P's current level, is a rather strong resistance
point that will take some time to break through.
The correlation between the levels of the S&P500 and the less representative
Dow is 85%, and between the daily returns, 94%. Thus, the Dow is almost
always mimicking the S&P 500. It is relatively safe to say therefore that the
challenge of the 4-4.5% of the current S&P500 level should be quite difficult
to surmount - even for a record-high Dow. Moreover, the Dow-chart
shows that a "channel formation" has formed over the past few months
and this also will be rather hard to break. Therefore, although the Dow
14,000 is in reach, there are still several technical obstacles in the path. And,
when it comes to psychological numbers, 4.1% above the current Dow
brings you to 13,666, which is probably - depending on your cultural background
- not the luckiest of all numbers!
DislikedNot at all... Market "reads" fundamentals and CB officers statements and trade a "likely" rate hike beforehand. By the time the hike is confirmed, trader are much more in the side of taking profit than to increase the long positions
Only a surprise hike like BOE's in February prompts a massive reaction afterwardsIgnored
Cable Now playing between 1.9870 to 1.9937
if cable break 1.9937 it will go to 1.9973
&
if cable break 1.9870 it ewill go to 1.9829
thank and Good luck to all
Dislikedhi again
Cable Now playing between 1.9870 to 1.9937
if cable break 1.9937 it will go to 1.9973
&
if cable break 1.9870 it ewill go to 1.9829
thank and Good luck to allIgnored
DislikedEjector seat at the ready. One weeks hard work down the drain. Please tell us newbies not to trade through the news...Ignored
DislikedUp to what level are the numbers manipulated? Up to or are it capable of lying? ....
Good questions to ask...
Ignored