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Cable Update (GBPUSD)

  • #433,621
  • Jun 27, 2016 6:44pm Jun 27, 2016 6:44pm
Asian session making a rally, talk of Fed cutting rates, plus S&P drop
Question is - will this carry over to tomorrow at London open.
Market is oversold - so thinking of going long after the first pull-back tomorrow
This is just a day trade - not swing
  • #433,622
  • Jun 27, 2016 10:28pm Jun 27, 2016 10:28pm
Ratings agency Standard and Poor's
has stripped the UK of its top AAA credit rating
after the vote to leave the European Union.

Lower on UK session perhaps. Might have some potential with this.
But then its a speculative opinion.

Nearing to a EURO USD buy still short from 113 200
Closing on 110 500 about now (270 pips).
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  • #433,623
  • Jun 27, 2016 11:13pm Jun 27, 2016 11:13pm
Still in short mode on pound dollar even if price spikes, will close trade on a retrace of this if it looks good.
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  • #433,624
  • Jun 27, 2016 11:49pm Jun 27, 2016 11:49pm
Quoting micho
lol brexit from euro 2016!
2nd time in a week!!!!
  • #433,625
  • Jun 28, 2016 12:49am Jun 28, 2016 12:49am
A visual recap from yesterday last update.

After having taken out the weak low (GB+preUS) and after a balance (announced before but that caused me a bad pain*) it finally went up to retake some of the above weak references of the yesterday GB ugly structure.

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*
Quoting Lock
{quote} Now both have been taken out. Let's see if it can now balance and start to correct some of the structure above. (Or if it want to test some more below, before to start balancing).
Ubi maior minor cessat
  • #433,626
  • Jun 28, 2016 1:05am Jun 28, 2016 1:05am
And this is the current situation. (note: 1 letter is 2 ticks in this market profile)
13277 is weak
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Ubi maior minor cessat
  • #433,627
  • Jun 28, 2016 1:09am Jun 28, 2016 1:09am
Quoting Lock
And this is the current situation. (note: 1 letter is 2 ticks in this market profile) 13277 is weak {image}
well, it was.
Ubi maior minor cessat
  • #433,628
  • Jun 28, 2016 1:18am Jun 28, 2016 1:18am
Quoting dean1star
Ratings agency Standard and Poor's has stripped the UK of its top AAA credit rating after the vote to leave the European Union. Lower on UK session perhaps. Might have some potential with this. But then its a speculative opinion. Nearing to a EURO USD buy still short from 113 200 Closing on 110 500 about now (270 pips). {image}
On its own, the credit downgrades to the UK should not affect government borrowing costs or the value of sterling. However, in such skittish markets, it doesn't take much to act as an excuse for opening up a fresh wave of selling, so who knows.

In recent years, the US and Japan both had high profile downgrades:

- Financial chaos was predicted when S&P downgraded the US a notch down from AAA, yet the dollar rallied in the weeks following and yields on US Treasuries were unaffected.

- Japan, with a public sector debt-to-GDP ratio of 230%, faced no problems from being downgraded and today the yield on its 10-year paper stands at -0.19%.

In the case of the UK, a downgrade from S&P was telegraphed to the market on Friday, yet Gilt yields have continued to be crushed across all maturities, with the 10-year yesterday yielding a record low of 0.93%.

What Japan, the UK and US all have in common is having their own currency, a floating exchange rate and no public sector debt issued in a foreign currency. Therefore, solvency can never be in question.
  • #433,629
  • Edited 1:46am Jun 28, 2016 1:31am | Edited 1:46am
Quoting gammase1
{quote} On its own, the credit downgrades to the UK should not affect government borrowing costs or the value of sterling. However, in such skittish markets, it doesn't take much to act as an excuse for opening up a fresh wave of selling, so who knows. In recent years, the US and Japan both had high profile downgrades: - Financial chaos was predicted when S&P downgraded the US a notch down from AAA, yet the dollar rallied in the weeks following and yields on US Treasuries were unaffected. - Japan, with a public sector debt-to-GDP ratio of 230%,...
I think you might need to go over your understanding of Debt in the form of Government debt
(also known as public debt, national debt and sovereign debt)

of which About 30% of UK national debt is held by oversees investors.
  • #433,630
  • Jun 28, 2016 1:46am Jun 28, 2016 1:46am
GB is going to open inside yes range and inside yes value. In this case it could be better to let the market shake out at least initially. (there is some minus development up to 13380 level, if it doesn't take out it, I suggest to carry this information forward)
Ubi maior minor cessat
  • #433,631
  • Jun 28, 2016 1:49am Jun 28, 2016 1:49am
[quote=gammase1;9003541]{quote} On its own, the credit downgrades to the UK should not affect government borrowing costs

Ratings and Interest Rates
Above all, credit ratings affect the cost of borrowingthat is, the interest rate that will have to be paid by the issuer to attract buyers.
The interest cost to the issuer is the coupon you will earn.

Brexit vote would affect UK's top credit score, says Standard & Poor's
Ratings agency says downgrade
would push up UK’s government borrowing costs and hurt its standing in global markets
  • #433,632
  • Jun 28, 2016 1:58am Jun 28, 2016 1:58am
Quoting dean1star
{quote} I think you might need to go over your understanding of Debt in the form of Government debt (also known as public debt, national debt and sovereign debt) of which About 30% of UK national debt is held by oversees investors.
The BOE can mop up, by stepping in as a buyer of Gilts under QE or using its open market operations.

How did the downgrade in 2011 affect the cost of borrowing in the US? Also a country running a current account and a budget deficit, thus reliant on foreign investors to hold it's government debt and other assets to ensure there is a surplus on the capital account to offset the deficit on the current account.

My understanding of debt dynamics and open market operations used by CBs of countries who issue and control their own currency is strong.
  • #433,633
  • Jun 28, 2016 2:02am Jun 28, 2016 2:02am
13300 round is now GB weak ref. Let's see if it's able to take out the tokyo cluster at 13118(13318 sorry), or not.
Ubi maior minor cessat
  • #433,634
  • Jun 28, 2016 2:06am Jun 28, 2016 2:06am
Quoting dean1star
{quote} Above all, credit ratings affect the cost of borrowingthat is, the interest rate that will have to be paid by the issuer to attract buyers. The interest cost to the issuer is the coupon you will earn. Brexit vote would affect UK's top credit score, says Standard & Poor's Ratings agency says downgrade would push up UKs government borrowing costs and hurt its standing in global markets
Credit rating agencies are not relevant when it comes to rating the solvency of sovereign debt issued by countries operating a floating exchange rate, with debt issued in their own currency and their own central bank.

Downgrades had no efffect on Japan, the US.

The highlighted area is not true, which is demonstrated by how yields on Gilts have fallen in past 2 sessions. The yield on 10-year paper is up by 2bps (in line with Bunds and Treasuries) this morning, due to increased appetite for risk.
  • #433,635
  • Jun 28, 2016 2:12am Jun 28, 2016 2:12am
Quoting Lock
13300 round is now GB weak ref. Let's see if it's able to take out the tokyo cluster at 13118(13318 sorry), or not.
taken out
Ubi maior minor cessat
  • #433,636
  • Jun 28, 2016 2:43am Jun 28, 2016 2:43am
Quoting Lock
13300 round is now GB weak ref. Let's see if it's able to take out the tokyo cluster at 13118(13318 sorry), or not.
Tokyo cluster at 13318 taken out, let's see if it is able to take out some more fo the yesterday GB minus divelpment aboveor not. (13336-13382) If not and if it is goning to stay and accept price below Tokyo high (13336) let's consider the weak references below starting with 13294 (previous gb hb)


and 13350 round is weak.
Ubi maior minor cessat
  • #433,637
  • Jun 28, 2016 2:57am Jun 28, 2016 2:57am
Quoting Lock
{quote} Tokyo cluster at 13318 taken out, let's see if it is able to take out some more fo the yesterday GB minus divelpment aboveor not. (13336-13382) If not and if it is goning to stay and accept price below Tokyo high (13336) let's consider the weak references below starting with 13294 (previous gb hb) and 13350 round is weak.
taken out

Now, for continuation above, I would like to see the third 30 min bar building above it. And I do not want to see it coming back into overnight range(more then 1 time or so) and consolidate below 13336.
Ubi maior minor cessat
  • #433,638
  • Jun 28, 2016 3:07am Jun 28, 2016 3:07am
visual legend from prev post

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Ubi maior minor cessat
  • #433,639
  • Jun 28, 2016 3:29am Jun 28, 2016 3:29am
Now 13322 is weak and we must add it to all the other weak refs below. Up and down overnight high. Not a good sign for continuation above. Still a portion of yes gb min dev to take out: if it leaves it like that, take this info forward. Sometime it is more important what a market doesn't do than what a market actually did...
Ubi maior minor cessat
  • #433,640
  • Edited 3:52am Jun 28, 2016 3:45am | Edited 3:52am
Quoting Lock
Now 13322 is weak and we must add it to all the other weak refs below. Up and down overnight high. Not a good sign for continuation above. Still a portion of yes gb min dev to take out: if it leaves it like that, take this info forward. Sometime it is more important what a market doesn't do than what a market actually did...
taken out

Recap: m30 period C was not able to stay above early morning high at 13354. Then it went down and closed inside overnith range below 13336. Now m30 period D is acceptin price below that level after having taken out the weak half back ref at 13322. And now 13300 is round weak.

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Ubi maior minor cessat
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