FXTM information and reviews
FXTM
93%
IronFX information and reviews
IronFX
92%
Libertex information and reviews
Libertex
91%
FXCC information and reviews
FXCC
90%
Markets.com information and reviews
Markets.com
89%
FxPro information and reviews
FxPro
88%
EUR/USD
1.1720
BTC/USD
42 648.00
GBP/USD
1.3685
USD/JPY
110.7470
USD/CHF
0.9235
USD/CAD
1.2661
EUR/JPY
129.7966

BoE lifts sterling, dollar battered but still standing


6 August 2020

Sterling jumps after BoE seems reluctant towards negative rates, upgrades forecasts. Stocks climb, dollar resumes downfall as markets keep betting Congress will deliver. Dollar testing a crucial support area again – tomorrow’s NFP may be pivotal
Otherwise, the spotlight remains on whether Congress will reach a deal soon. BoE strikes a more cheerful tone, pound listens

The Bank of England (BoE) unanimously voted to keep its policy unchanged today and struck a fairly optimistic tone. Even though it acknowledged the various risks that still hover over the UK economy, it also highlighted that ‘spending has recovered significantly since April’, and raised quite substantially its GDP forecasts for this year.

The takeaway for markets was that policymakers raised questions about the effectiveness of negative interest rates, which has been widely speculated as the BoE’s next move. And with the new forecasts implying inflation will be at almost 2% next year, there’s seemingly no rush to add more stimulus. That pushed sterling higher, as traders trimmed bets for an adoption of negative rates over the coming year.

Overall, the pound has staged a remarkable rally lately, capitalizing mostly on a weaker dollar and stronger risk appetite, as well as improving domestic data. But unless the dollar continues to collapse, it’s difficult to envision this rally stretching much further. Because UK inflation expectations remain much higher than those for the US or the Eurozone, Britain now has the lowest real interest rates in developed markets by far, which is anathema for a currency over time. Combined with the unsettled Brexit saga, this may ultimately come back to haunt sterling.

Democrats play hardball in negotiations, stocks cheer


In the broader market, optimism remains the driving force. Stock markets continue to march higher, with the S&P 500 now just 2% away from its record high amid growing expectations that the new stimulus package may be closer to the $3 trillion the Democrats are pushing for, rather than the $1 trillion the Republicans want.

In a nutshell, the Democrats – led by House speaker Nancy Pelosi – are playing hardball, sensing that they have far more negotiating leverage. Pelosi is apparently not moving one inch on her ‘red lines’, such as the $600/week in extra unemployment benefits and large transfers to local governments, reckoning that any delay in this agreement will hurt the Republicans far more in the upcoming elections.

Judging by the price action lately, markets believe she is right, and are thus pricing in a larger agreement in size and scope, even if it is delayed a few days or weeks.

Dollar near crucial support level, waiting for NFP


The dollar has been the main casualty of the ‘risk on’ mood that has engulfed markets, with euro/dollar testing the $1.19 zone again on Thursday. Yet, the pair found fresh sell orders and was rejected, which suggests that the dollar is "down but not out".

Whether this technical area is violated will be the clearest signal for what comes next in the FX arena: will the dollar’s downfall resume or has it gone too far already? The catalyst may be tomorrow’s payrolls report. It’s a tough one to predict and there’s massive dispersion among forecasters, but most signs point to a disappointment relative to the rosy 1.6 million consensus.

As for today, besides any updates in the Congressional negotiations, investors will keep one eye on the weekly US jobless claims and on some remarks by the Fed’s Kaplan (14:00 GMT) and Brainard (16:00 GMT).

#source

Related

Further recovery in XAU/USD appears elusive but Powell holds the key
Further recovery in XAU/USD appears elusive but Powell holds the key

Gold price rebounds from fresh six-week lows but upside appears limited. Fed Chair Jerome Powell’s speech in focus, FXStreet’s Dhwani Mehta reports...

24 Sep 2021

Stocks rise after Fed walks fine line on tapering
Stocks rise after Fed walks fine line on tapering

European markets trading higher after the Fed delivered another lesson in how to gently massage markets into accepting that tightening is on its way. The FTSE 100 has...

23 Sep 2021

Hawkish Fed brings out the bulls as dollar and stocks rise
Hawkish Fed brings out the bulls as dollar and stocks rise

The Federal Reserve took its biggest step yet towards scaling back its pandemic stimulus on Wednesday following the conclusion of its two-day policy meeting...

23 Sep 2021

Trading the BoE and FOMC meetings
Trading the BoE and FOMC meetings

The FOMC and the BoE meeting are firmly in our sights now, and positions and exposures will need to be managed accordingly. Certainly, the FOMC meeting could...

22 Sep 2021

Stocks bounce back after Evergrande panic
Stocks bounce back after Evergrande panic

As investors increasingly liken the Evergrande crisis with the collapse of the Lehman Brothers in 2008, they remain in the dark about the Chinese government's intentions...

21 Sep 2021

Oil Was Put on Hold
Oil Was Put on Hold

The oil price is falling after rallying before. Early in another September week, Brent is trading at $74.50 and has a lot of room to correct. The strong greenback...

20 Sep 2021


Forex Forecasts

OctaFX information and reviews
OctaFX
86%
HotForex information and reviews
HotForex
85%
XM information and reviews
XM
80%
FXCM information and reviews
FXCM
79%
Vantage FX information and reviews
Vantage FX
78%
Moneta Markets information and reviews
Moneta Markets
77%

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.