The British pound (GBPUSD),
otherwise known as Cable, is in a well-defined upward sloping channel, as can
be seen from the chart above. We held a position in this but exited it when price
came close to 1.70, which has since stayed in place as a resistance level.
Remember the significance of nice round numbers on the collective market
psyche.
We have set the Mandelbrot
routine to monitor this pair and it will enter the market again, with a long
order, when and if it gets the required signal. We would ideally like that
point to be closer to the bottom of the channel. The Bank of England minutes
from its last Monetary Policy Committee (MPC) meeting are due to be released
later this morning and they could provide the catalyst for a move. In the
meantime we wait.
Bank of Japan does…very little
We have also been waiting
patiently for something to happen with the Dollar Yen pair (USDJPY). (See
yesterday’s commentary). At the time of this writing the Bank of Japan has
just released its Monetary Policy Statement. There was no change to the
interest rate, as expected, and the statement contained some words relating to
capital flows, all of which did nothing, one way or the other, for USDJPY.
As noted previously, the Yen
is sensitive to the movement of the Nikkei share index. This has been soft of
late, which tends to strengthen the Japanese currency. This would have the
effect of lowering the USDJPY rate so unless the BoJ press conference, now
under way, comes out with words that weaken the Yen (cause the USDJPY pair to
rise), the bias in this pair has to be to the downside.
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