ith the US closed for Independence Day, all eyes this morning have been on today’s Bank of England and European Central Bank meetings.
Of the two, the Bank of England meeting had the biggest initial impact on trading. This was Mark Carney’s first meeting in his new role and he wasted no time in improving communications by issuing a statement along with the decision. In the statement, the MPC indicated that although the UK economy has improved lately, the recovery remains relatively weak and that rising market interest rates (like the recent jump in European treasury yields) could hamper recovery efforts. At its next meeting, the Bank indicated it intends to consider adopting forward guidance.
The street has taken this statement as being dovish and suggesting that rate increases appear unlikely any time soon and that further stimulus can`t be ruled out. On the news the FTSE
has jumped nearly 2.0% while GBP rapidly fell by more than a big figure before stabilizing near $1.5100.
In other currency action today, EUR has fallen back under $1.3000 again after the ECB meeting, dragging other continental currencies down with it. ECB President Draghi indicated interest rates to remain the same or potentially could move lower for an extended period and that monetary policy will remain accommodative as long as needed. Selling pressure has accelerated since the press conference started.
Asia Pacific currencies have been strong with AUD and NZD continuing to base build and JPY hovering around 100.00. Gold is trading near $1 250 while silver remains stuck below $20.00.
The rest of today`s trading appears set to be dominated by the fallout from the two big central bank meetings. Tomorrow, all eyes turn to the big North American employment reports (US nonfarm payrolls and Canada jobs). With many Americans taking a long weekend, we could see more volatile action than usual off of the reports in thinner markets.
Significant economic announcements released overnight include:
UK interest rate decision rate 0.50%, QE £375B no change as expected
ECB interest rate decision 0.50% no change as expected
Economic reports due later today include:
There are no major economic announcements scheduled for later today.
North American Indices
US30 is breaking out today, clearing 15,000 once again and trading near 1,525. RSI
retaking 50 confirms upward momentum renewed. Downtrend line test near 15,220 followed by prior high near 15,325.
SPX500 is building on yesterday`s stronger close trading above 1,6225. RSI breaks through 50 to confirm a new upswing. Key downtrend line test near 1,640.
NDAQ100 continues to rebound, trading near 2,970 with next resistance near 3,000 then the key 3,050 level.
US SmallCap 2000 is bumping up against key 1,000 resistance today as RSI suggests upward momentum accelerating. .
Canada60 (Toronto60) finding support at a higher low near 690. Next upside resistance near 700 then 710.
Gold is stabilizing near $1,250 just below the key $1,260 resistance level it needs to clear to signal a new upswing that could test the $1,300-$1,320 area. Support near $1,235 then $1,200.
Silver is trying to form an H&S base and may have completed the right shoulder near $19.20 but it needs to break the $20.00 neckline to confirm the start of a new uptrend.
US crude is consolidating yesterday`s big breakout holding above $100.00 with initial resistance near $102.00 then $106.00.
UK crude is starting to encounter resistance near the high end of its $99.60 to $106.00 trading channel.
USDCAD continues to stall near $1.0500, well short of $1.0670 key resistance. A growing negative RSI divergence suggests upward momentum slowing.
is under a lot of pressure today breaking down through $1.3000. RSI suggests downward mo accelerating with technical room to fall further. Currently testing a key uptrend support line near $1.2900, it could test $1.2840 or $1.2730 on a breakdown.
GBPUSD has been knocked back under $1.5100 from $1.0270 resistance, signalling the start of a new downleg on trend that could set up a retest of the key $1.5000 level.
USDCHF remains in an uptrend, bouncing back above $0.9500 from a higher low. RSI confirms upward momentum remains intact with technical room to run. Next upside resistance appears near $0.9570 then $0.9630 on trend.
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Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.