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Market Direction Ahead of BoE Rate Decision

Thu, Sep 10 2009, 10:51 GMT
by Matt James

Advanced Currency FX

Stocks coming off their highs during early trading in Europe ahead of the BoE interest rate decision out later this morning. Oil still continuing the drive northwards now trading at over $72 per barrel as OPEC agrees to maintain production at current levels in order to keep prices at this level, gold coming off its highs at over $1000 per ounce at $990 at time of writing. All this meaning that the markets across the board are trading steady awaiting the comments made from governor Mervyn King reference the 'emergency stimulus package' as reports show that the UK is lagging behind other 'super power' nations. The economic data out this morning for the UK house prices from the Halifax came out better than expected however has had no effect on cable at this time. Stocks in Asia rose overnight, weakening the Yen to 92.26 (38.2% fib ret level for the weeks trading for a third consecutive time) against the dollar.

Cable now trading at 1.65 at time of writing having fallen from the highs of 1.6567. The BoE rate decision out later today the obvious influencing factor for the sell off even though Halifax house price data came out better than expected. Next support level for the cable trade at 1.6480 ahead yesterday's low of 1.6450/55 and the 38.2% fib level of 1.6411. The comments on the 'stimulus package' the key to the ongoing move into the US trading session this afternoon. Resistance at 1.6525 ahead of 1.6540. Favouring further downside pressure for the pound across the board. The pound yen trade the preferable currency pair for this afternoon selling at 152.30, buying back above 151.60/70, stop at 152.60.

Euro trading higher across the board through this mornings trading, coming off its highs of 1.4587 to trade at 1.4545 at time of writing. Should stocks, oil and gold sell off during this afternoons trading session expect a further move south for the Euro back to the 1.45 level. Resistance at 1.4570/80 up to 1.46 (highs of yesterday). Beyond here the next resistance level (2 year 61.8% fib ret level) of 1.4640 the focus.

Yen selling off against the pound, Euro and the dollar, wavering at the 38.2% level for the week at 92.27. The sell off from the stocks in latter European trading and US stock futures looking to open down, expect a strengthen, certainly against the pound this afternoon on the BoE rate decision along with the dollar. Look for a move back towards 151.60/70 against the pound, 92 against the dollar.

Published on  Thu, Sep 10 2009, 10:51 GMT