Caught in a (sterling) trap

October 12, 2016

What’s bad for the pound is good for the FTSE, at least up to a point. As broader measures of the pound value were touching levels last seen in the 1970s, the FTSE100 was hitting new highs, helped by the resources and mining dependency of constituents who are seeing rising prices and greater income from pricing output in dollars. We’ve seen some reversal of sterling overnight, in part on the news that PM May is to put Brexit terms to a vote in parliament. There had been some concern regarding the degree to which parliament was being by-passed in the decision surrounding the terms of the UK’s departure, so this announcement appears to be a way of placating such fears. As a result, sterling is around 1% higher as cable has recovered in the Asia sessions, after touching just below the 1.21 level yesterday evening. Bigger picture though, we’ve been here before, where the default setting for sterling is weaker, such as the early part of the year. It seems we’re here again, with sterling weakening against most other currencies, not just the US dollar.

The dollar will be taking a closer than usual look at the FOMC meeting minutes this evening when they are released. The interesting thing at present is the degree to which markets see November as a ‘not very live’ meeting, whereas December is anything but. The interest rate markets have the respective probabilities at 17% and 68% respectively. The biggest risk is that the tone of the minutes suggests an increased chance of a November move. Of course, much of the market thinking is that the Fed is unlikely to move so close to a presidential election. The Fed may want to puts itself across as being far more non-political and the minutes would be the best forum to achieve this. If so, further dollar upside would ensue.

Publication source
FxPro information  FxPro reviews

February 24, 2017
Oil prices slightly grew
Brent oil prices extended their recovery in the Asian session on Thursday. Buyers led the price higher and broke 56.50 dollars per barrel in the early European morning...
February 24, 2017
Dollar drifts on Fed's lack of optimism
FOMC February meeting minutes released on Wednesday failed to provide support for the bulls to manage a sustainable breakout above 101.50...
February 24, 2017
Can gold continue post Fed rally?
Gold jumped to a 3 month high today, snapping a 3-day losing streak today after traders digested yesterday’s minutes meeting from the US Federal Reserve...

FOREX.com Rating
Orbex Rating
XM Rating
Fort Financial Services Rating
Larson&Holz IT Ltd Rating
Cms Trader Rating

OptionBit Rating
TropicalTrade Rating
Porter Finance Rating
First Binary Option Service Rating
TopOption Rating
Binary Brokerz Rating