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Bank of England’s MPC

Blows hot and cold
August 3, 2017

At yesterday’s meeting and press conference, where the key interest rate was (as widely expected) left unchanged at a record low 0.25 per cent, the committee trimmed its forecasts for economic growth blaming Brexit.  Governor Carney noted ‘uncertainty about market access post-Brexit is starting to affect some business decisions and it has consequences for investment’.  You don’t say!  The team also warned that future rate hikes might be much faster than currently implied by the yield curve.

Japan in June and data for labour cash earnings dropped by an annualised -0.4 per cent.  This is the average income, before taxes, that regular employees earn including bonuses and overtime.  Shrinking pay has been a regular feature of the last twenty years, pay growth hovering between plus and minus 2 per cent.  Wage rises over two per cent have only happened 8 times since this quarterly data was first collated in 1991.

DAX 30

Bearish momentum has eased considerably this morning but would increase on a close today below 12000 – a psychological level and the lowest weekly close since the first week in March.    

 

SHORT TERM TRADER:  Small short at 12225; stop above 12355.  Target 11550.

 

POSITION TAKER:  Short at 12175; stop above 12400.  Target 11500.

FTSE 100

Sterling weakness – trading up to £0.9050 per euro – helping this internationally based group of companies. 

 

SHORT TERM TRADER:   Short at 7394; stop above 7520.  First target 7300.

 

POSITION TAKER:  Square.

S&P 500

Hovering close to the record high in what might be a tiny triple top since the 20th July.  This afternoon the market’s perennial favourite US employment data is released.  Note that over many months falling unemployment has had precious little effect on wages or inflation.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

BRITISH POUND/US DOLLAR

Yesterday’s price action, caused by the Bank of England, is a big full stop for this week.  A decent bearish engulfing candle suggests consolidation today, hopefully above first support at 1.3100 and probably no higher than 1.3225.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Small long at 1.3090; stop below 1.3080.  Target 1.3400.

EURO/US DOLLAR

Consolidating neatly at this year’s highest levels as report on the Eurozone economy are increasingly rosy.

 

SHORT TERM TRADER:  Long at 1.1740; stop below 1.1700.  Target 1.2150.

 

POSITION TAKER:  Square.

 

GOLD

Quite a tussle going on at the 1265 are with a hanging man candle yesterday.

                            

SHORT TERM TRADER:  Tiny short at 1266; stop above 1280.  Target 1220.

 

POSITION TAKER:   Square.