Daily Trade Recommendation

Today’s Trade – Market Update

Posted 20th August 2014 – 08:00AM London Time

Next Trade Call Update – 21st August 7:30am London time

Trade Recommendations for current Session

The GBP is still a very bullish currency that is being driven by speculation of a interest rate hike from the Bank of England by the end of 2014, the BoE are expected to become more hawkish imminently, given that any rise in interest rates will have to be ushered in gradually to keep pace with inflation.
USD-index remains around September 2013 levels and in close proximity to the 82.00 handle after extending on yesterday’s gains following strong US data,ahead of today’s FOMC minutes. Major USD pairs have consequently come underselling pressure; EUR/USD sits near its worst levels since Nov. 2013, USD/JPY broke back above 103.00 and trades at around its April 7th levels while NZD/USD breached the 0.8400 handle for the 1st time since March.
Elsewhere, AUD/USD is back below the 0.9300 handle broken earlier amid futile jawboning of the currency from RBA Governor Stevens ahead of key risk events today, including BoE and FOMC minutes, RBA’s Stevens signals Australian monetary.


Pre Session events

Overnight newsflow quiet ahead ofkey risk events today, including BoE and FOMC minutes, RBA’s Stevens signals Australian monetary policy is to remain unchanged for the time being, briefly tipping AUD/USD above 0.9300 as he failed to talk down the currency.

Pre Session events

Overnight newsflow quiet ahead ofkey risk events today, including BoE and FOMC minutes, RBA’s Stevens signals Australian monetary policy is to remain unchanged for the time being, briefly tipping AUD/USD above 0.9300 as he failed to talk down the currency. USD marched higher throughout late US trade and the Asia-Pacific session, after strong US housing data yesterday pushed EUR/USD close to November 2013 lows of 1.3296.

There is nothing to really trade today as price action has been relatively subdued across major crosses and pairs following RBA coming out neutral and the market awaits the BoE rate votes.

The most attractive day trade would be to short EURNZD, given the current sentiment on the NZD fundamentally however it is still a bullish currency, what makes this more trade attractive of course is the interest earned on the swap. You could also hold this position as the NZD is oversold at present and we can expect to see the EUR fall against it over the coming month.

In relation to the UK MPC meeting minutes BoE rate vote; if the vote comes out as anything other than 9-0 this will have a direct effect on the GBP causing it to rally, this will be a indicator that there will be a rate hike sooner rather than later. The current sentiment on the GBP presents some interesting buying opportunities as fundamentally it is very credible to rally; GBPUSD for example seems to be hitting support at 1.66000, potentially a good position to get in and hold obviously just awaiting news on the vote. If however the vote remains 9-0 we will need to keep a keen eye on the statement released following the vote but predict a 9-0 vote will have little sway on the market.