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FXX

Experienced member
1,140 195
Long USDZAR @ 14.11875 - Continuation of dovish sentiment and trade data expected at 6.5bln yet coming in at 4bln. There there has been a heap of bad data and negative central bank and finance minister speeches. I see this hitting 15 but targeting the recent high which is over 100 pips.
 

Brumby

Established member
593 137
post data, looking to get in on a retrace. are you in?
Yes at $1.28902. I was hopeful that the GDP data would be positive so that there would be some sell off to buy at a lower level to position for Poloz's likely dovish statement. Since it was a weaker number, it forced my hand to enter on that data. Hopefully Poloz's statement will be dovish as anticipated and help to push it to my price target.
 
Last edited:

FXX

Experienced member
1,140 195
Yes at $1.28902. I was hopeful that the GDP data would be positive so that there would be some sell off to buy at a lower level to position for Poloz's likely dovish statement. Since it was a weaker number, it forced my hand to enter on that data. Hopefully Poloz's statement will be dovish as anticipated and help to push it to my price target.
I can't see Poloz being anything but cautious and dovish. waiting for a pullback if it happens. You see the North Korea news. I thought they said they were serious about testing above the pacific ocean. This news story suggests they were going to test underground again.
 

Brumby

Established member
593 137
I can't see Poloz being anything but cautious and dovish. waiting for a pullback if it happens. You see the North Korea news. I thought they said they were serious about testing above the pacific ocean. This news story suggests they were going to test underground again.
I am assuming that the US would not start a war with NK especially when Trump is over there. The market seems to be discounting the NK rhetoric. If there is a war, I would sell AUDCHF.
 

FXX

Experienced member
1,140 195
closed EURGBP for a loss (stop not hit)- EU inflation has softened any potential it may have had.
 

FXX

Experienced member
1,140 195
Long USDCAD on consumer confidence beat @ 1.28931
On the wire: Sentiment for $ softer on tax reform concerns. I have closed this trade for a small profit - doesn't look like there is enough sentiment to drive this and i would rather look for better opportunities.
 

Nowler

Established member
925 74
If there is a war, I would sell AUDCHF.
Why against the AUD?
Is this just a current circumstance thing or as a general rule of thumb?

When I started trading oil I was thinking about how conflict increases oil prices and this then led to me looking for forex pairs to trade in the event of military conflict.
I have not done anything more than a general look at things but what I did find out was that the Swiss are a major arms supplier, so buying the CHF makes sense to me. I'm just curious as to why you would buy it against the AUD?
 

FXX

Experienced member
1,140 195
Why against the AUD?
Is this just a current circumstance thing or as a general rule of thumb?

When I started trading oil I was thinking about how conflict increases oil prices and this then led to me looking for forex pairs to trade in the event of military conflict.
I have not done anything more than a general look at things but what I did find out was that the Swiss are a major arms supplier, so buying the CHF makes sense to me. I'm just curious as to why you would buy it against the AUD?
I think it is because:

Swissy is a safe haven as you know. Brumby is pairing it with a weaker currency which is the AU$ and the latest sentiment for that pair is weaker China Manufacturing PMI released today along with general dovish AU data recently
 

Nowler

Established member
925 74
I think it is because:

Swissy is a safe haven as you know. Brumby is pairing it with a weaker currency which is the AU$ and the latest sentiment for that pair is weaker China Manufacturing PMI released today along with general dovish AU data recently
Ah, I understand.
Thank you sir
 

FXX

Experienced member
1,140 195
PREVIEW: BoE November Rate Decision, Minutes Release & Quarterly Inflation Report (QIR) 1200GMT/0700CDT, Press
Conference at 1230GMT/0730CDT
• Current BoE Base Rate: 0.25%, Asset Purchase Facility: GBP 435bln.
• The MPC is expected to raise its base rate by 25bps to 0.5% with markets believing that recent data is enough to
support calls for lift-off.
• This meeting sees the release of the decision itself, the vote split and the minutes, alongside the central bank’s
Quarterly Inflation Report, with the press conference scheduled for 1230GMT/0730CDT.
BACKGROUND
At the previous announcement in September, the MPC stoked expectations of a rate hike at the upcoming meeting with the
accompanying minutes stating that “…some withdrawal of monetary stimulus is likely to be appropriate over the coming
months in order to return inflation sustainability to target.”.
Since then, markets have continued to price in expectations for a 25bps hike this week, with market pricing now standing
at 85-95% and tightening forecast by 47/65 surveyed by Reuters. In terms of the vote split, consensus is looking for a 6-3
vote (8/22 surveyed by Reuters), although this is far from an outright majority, with 6/22 looking for 7-2 and other forecasts
ranging from 9-0 to 4-5 (unchanged).
In terms of the potential dissenters, Barclays (looking for 7-2) believe that Ramsden will likely be a dissenter in lieu of his recent
appearance at the Treasury Select Committee, with the bank undecided on whether Cunliffe or Tenreyro will join him in his dissent.
(discussed in more detail below).
DEVELOPMENTS SINCE THE PREVIOUS MEETING
GDP
Expectations for a rate hike at this week’s meeting were cemented by last week’s Q3 GDP release which printed at 0.4%
Q/Q (Exp. 0.3%) and 1.5% Y/Y (Exp. 1.4%) showing balanced growth across all sectors and in-fitting with the MPC’s August
projections. In terms of projections in the QIR, expectations are for little change this time round, although 2017 growth could be
nudged slightly higher given last week’s numbers; a view backed by BAML.
Inflation:
Y/Y CPI is currently running at 3.0% (Sep), slightly ahead of the August projections, which looked for inflation to peak in
October at around the 3% level (was changed to rise above 3% in October in the September minutes) and the Bank’s 2.8% Y/Y
forecast for September. With inflation at current levels, most expect the majority of the MPC to vote for a hike with TD
Ameritrade also highlighting that inflationary pressures have come less from exchange-rate pass through and more from domestic
factors than expected. The (slightly ahead of expectation) inflation data could be factored into near-term projections,
according to HSBC. However, RBC note that a potential higher path for rates over the 2-3yr timeframe could weigh on
inflation expectations further out in the forecast horizon.
Labour market:
The unemployment rate is currently running at 4.3% (was expected to trough at around 4.4%) and as such, RBC highlight that this
combined with low productivity could suggest that slack has eroded at a quicker rate than anticipated in August; a view that
was also referenced in the BoE’s September minutes. Core and headline weekly earnings grew slightly faster than expected
in August (2.2% 3m/y vs Exp. 2.1%), however, remain subdued by historical levels and the squeeze on real wages continues,
according to Barclays. ING suggest that markets may not see wage growth take-off to the extent the Bank is forecasting due
to ongoing Brexit uncertainty, weaker demand and cost pressures relating to the softer GBP. Therefore, look out any potential
adjustments on this front.
MPC rhetoric:
Since the September meeting, governor Carney has reiterated that a rate hike might be appropriate over the coming months.
Given mounting market speculation of a 25bps hike this time out, he is viewed as favouring “lift-off” as he would have mostly likely
used his platform to tip the decision back towards a balance if he was unconvinced on hiking; something which he has not done.
Elsewhere, Saunders and McCafferty are almost nailed-on to maintain their calls for a hike whilst Vlieghe followed up last month’s
meeting by stating that the “appropriate time for hike might be as early as the coming months”. Broadbent has been largely
inconspicuous since July, but markets broadly see him favouring consensus, while Haldane could vote for a hike after flirting with
the idea back in June. In terms of potential dissenters, Ramsden, has been ear-marked as a candidate after recently stating that he
wasn't in the MPC majority foreseeing a hike in the coming months. Tenreyro, who also appeared at the TSC, noted caution over
premature rate hikes, although Barclays ultimately expect her to fall in line with consensus. Finally, question marks also surround
Cunliffe after he noted that “we are not seeing sustained signs of domestic inflation pressure” and that he “does not want to
anticipate the November rate decision”.
 
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FXX

Experienced member
1,140 195
sentiment can sure change on the fly

As soon as Trump started speaking to me it was clear that he was going to rehash that he didn't want to phase in tax reforms and this for me triggered a another entry in USDCAD.
 

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Brumby

Established member
593 137
I think it is because:

Swissy is a safe haven as you know. Brumby is pairing it with a weaker currency which is the AU$ and the latest sentiment for that pair is weaker China Manufacturing PMI released today along with general dovish AU data recently
Frankly if there is another Korean war especially involving WMD, no living trader has ever traded such a scenario. Therefore you go to first principle and a safe haven play i.e. CHF is the natural choice. Traditionally JPY would be another one but not this time as unlikely Japan could be de-coupled from the mess.

38 % of Australia's trade is with China, Japan and Korea. AUD as a choice is more fundamental than some Chinese PMI number.
 
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Reactions: Nowler

Brumby

Established member
593 137
PREVIEW: BoE November Rate Decision, Minutes Release & Quarterly Inflation Report (QIR) 1200GMT/0700CDT, Press
Conference at 1230GMT/0730CDT
• Current BoE Base Rate: 0.25%, Asset Purchase Facility: GBP 435bln.
• The MPC is expected to raise its base rate by 25bps to 0.5% with markets believing that recent data is enough to
support calls for lift-off.
• This meeting sees the release of the decision itself, the vote split and the minutes, alongside the central bank’s
Quarterly Inflation Report, with the press conference scheduled for 1230GMT/0730CDT.
BACKGROUND
At the previous announcement in September, the MPC stoked expectations of a rate hike at the upcoming meeting with the
accompanying minutes stating that “…some withdrawal of monetary stimulus is likely to be appropriate over the coming
months in order to return inflation sustainability to target.”.
Since then, markets have continued to price in expectations for a 25bps hike this week, with market pricing now standing
at 85-95% and tightening forecast by 47/65 surveyed by Reuters. In terms of the vote split, consensus is looking for a 6-3
vote (8/22 surveyed by Reuters), although this is far from an outright majority, with 6/22 looking for 7-2 and other forecasts
ranging from 9-0 to 4-5 (unchanged).
In terms of the potential dissenters, Barclays (looking for 7-2) believe that Ramsden will likely be a dissenter in lieu of his recent
appearance at the Treasury Select Committee, with the bank undecided on whether Cunliffe or Tenreyro will join him in his dissent.
(discussed in more detail below).
DEVELOPMENTS SINCE THE PREVIOUS MEETING
GDP
Expectations for a rate hike at this week’s meeting were cemented by last week’s Q3 GDP release which printed at 0.4%
Q/Q (Exp. 0.3%) and 1.5% Y/Y (Exp. 1.4%) showing balanced growth across all sectors and in-fitting with the MPC’s August
projections. In terms of projections in the QIR, expectations are for little change this time round, although 2017 growth could be
nudged slightly higher given last week’s numbers; a view backed by BAML.
Inflation:
Y/Y CPI is currently running at 3.0% (Sep), slightly ahead of the August projections, which looked for inflation to peak in
October at around the 3% level (was changed to rise above 3% in October in the September minutes) and the Bank’s 2.8% Y/Y
forecast for September. With inflation at current levels, most expect the majority of the MPC to vote for a hike with TD
Ameritrade also highlighting that inflationary pressures have come less from exchange-rate pass through and more from domestic
factors than expected. The (slightly ahead of expectation) inflation data could be factored into near-term projections,
according to HSBC. However, RBC note that a potential higher path for rates over the 2-3yr timeframe could weigh on
inflation expectations further out in the forecast horizon.
Labour market:
The unemployment rate is currently running at 4.3% (was expected to trough at around 4.4%) and as such, RBC highlight that this
combined with low productivity could suggest that slack has eroded at a quicker rate than anticipated in August; a view that
was also referenced in the BoE’s September minutes. Core and headline weekly earnings grew slightly faster than expected
in August (2.2% 3m/y vs Exp. 2.1%), however, remain subdued by historical levels and the squeeze on real wages continues,
according to Barclays. ING suggest that markets may not see wage growth take-off to the extent the Bank is forecasting due
to ongoing Brexit uncertainty, weaker demand and cost pressures relating to the softer GBP. Therefore, look out any potential
adjustments on this front.
MPC rhetoric:
Since the September meeting, governor Carney has reiterated that a rate hike might be appropriate over the coming months.
Given mounting market speculation of a 25bps hike this time out, he is viewed as favouring “lift-off” as he would have mostly likely
used his platform to tip the decision back towards a balance if he was unconvinced on hiking; something which he has not done.
Elsewhere, Saunders and McCafferty are almost nailed-on to maintain their calls for a hike whilst Vlieghe followed up last month’s
meeting by stating that the “appropriate time for hike might be as early as the coming months”. Broadbent has been largely
inconspicuous since July, but markets broadly see him favouring consensus, while Haldane could vote for a hike after flirting with
the idea back in June. In terms of potential dissenters, Ramsden, has been ear-marked as a candidate after recently stating that he
wasn't in the MPC majority foreseeing a hike in the coming months. Tenreyro, who also appeared at the TSC, noted caution over
premature rate hikes, although Barclays ultimately expect her to fall in line with consensus. Finally, question marks also surround
Cunliffe after he noted that “we are not seeing sustained signs of domestic inflation pressure” and that he “does not want to
anticipate the November rate decision”.
The problem currently is that news associated with Brexit negotiations is the main driver behind cable price movements not prospective rate hike. The worst part is that there is no news release schedule on politician making Brexit statement. The next round of negotiations is Nov. 9 - 10.
 

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