MARKET BRIEFING – LONDON OPEN 06.08.2015
Today is the big and long expected day for the British pound, called by many media the “Super Thursday” At noon London time the Bank of England will release its August interest rate decision together with the minutes of the Monetary Policy Committee meeting and new economic forecast.
This will be a new communication format, as all the elements are released at the same time. At 12:45 pm London time Mark Carney, BOE governor will hold a press conference.
Even though the interest rate is not expected to be increased this time, remaining at 0.5% which is in place since 2009, the policy tone is to be shifted. This will significantly intensify the high impact event.
The Governor Mark Carney has mentioned earlier that the rotation of the year will be the right time to start raising rates. Hence, the most likely we will see the rise in February 2016, which will be marked as a turning point.
It is important to follow the major points of the today’s event. Firstly the MPC voting is projected to change this time from the unanimous decision to hold the interest rates, voted for the last 7 months. This time the economists seeing at least two out of nine members to vote in favour of the increase.
Secondly, inflation forecasts will play a role of the future key guide. Changes regarding the medium-term outlook relative to the 2% target will be the main signal to reveal whether tighter or looser monetary policy will be required.
Wage growth rate will be an important component of today’s meeting. According to the latest statistics, the pay is rising at the fastest annual velocity during the last five years. That could be an alarm bell about the inflationary pressure in the labour market. On the other hand, some analytics count that’s the pace is not enough for the interest rate hike.
The language of the MPC Minutes will require a close observation also. For example the July’s minutes had a new line, which was reading as follows: “For a number of members, the balance of risks to medium-term inflation relative to the 2 per cent target was becoming more skewed to the upside at the current level of bank rate.”
One of the factors that could deter the enthusiasm about the rate increase could be the situation in Greece, which is still unresolved.
GBPUSD remains to range within 1.5670 – 1.5530 corridor in the expectation of the event. High volatility on all British Pound pairs should be anticipated this afternoon.
EURUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1.1008
Target 2: 1.0802
Projected range in ATR’s: 0.0103
Daily control level: 1.1125
GBPUSD
The intraday technical outlook
Trend 1 hour: Range
Target 1: 1.5695
Target 2: 1.5507
Projected range in ATR’s: 0.0094
Daily control level: 1.5670
USDJPY
The intraday technical outlook
Trend 1 hour: Up
Target 1: 125.47
Target 2: 124.23
Projected range in ATR’s: 0.6240
Daily control level: 124.45
USDCHF
The intraday technical outlook
Trend 1 hour: Up
Target 1: 0.9868
Target 2: 0.9708
Projected range in ATR’s: 0.0080
Daily control level: 0.9710
USDCAD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.3274
Target 2: 1.3078
Projected range in ATR’s: 0.0098
Daily control level: 1.2910
AUDUSD
The intraday technical outlook
Trend 1 hour: Range
Target 1: 0.7441
Target 2: 0.7269
Projected range in ATR’s: 0.0086
Daily control level: 0.7260
GOLD
The intraday technical outlook
Trend 1 hour: Range
Target 1: 1101.47
Target 2: 1067.81
Projected range in ATR’s: 16.830
Daily control level: 1105.00
OIL
The intraday technical outlook
Trend 1 hour: Down
Target 1: 51.58
Target 2: 48.66
Projected range in ATR’s: 1.4630
Daily control level: 55.50
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