Pound reverses course after minutes

Yesterday was a bad day for British Pound when CPI was released. However, today the picture changed as Bank of England minutes were released and Pound rallied against all currency pairs. In most cases the move was around one hundred pips in a matter of a few minutes. I do expect this strength to continue as bullish minutes show intentions of Bank of England to increase interest rates in the nearest future. It may not do so, but as inflation picks up they will be forced to do that sooner rather than later. 

Another risk even is coming in about ten minutes when chief of Federal Reserve Ben Bernanke will give a speech on semiannual policy to the House. The bias remains bearish for the US dollar. The last thing that can move markets today is the interest rate decision from the Central Bank of Canada. Canadian dollar looks slightly bullish, particularly against Japanese Yen and possibly US dollar. However, we have to see what Ben Bernanke points out to US politicians regarding his financial policy. I am intending to buy eur/usd above 1.3155 and cad/jpy if it goes above 96.10 level with a 30 pip stop. The take profit area is around 97.00 for cad/jpy and 1.3290 for eur/usd.

Waiting for US CPI data

Europe and Great Britain CPI data has been released. Although British CPI was slightly lower than expected British Pound fell across the board, particularly against commodity currencies. It is consolidating now, but in the wake of tomorrow’s data (Bank of England minutes) we can expect Pound weakness to continue. This week is full of CPI releases. Markets are now positioning themselves for US CPI that is to be released at 12:30 GMT today. From current technical action you can see that traders are bearish towards US dollar and are expecting negative data from United States. 

One can even see sort of a rounding base in eur/usd after correcting from 1.3200 highs that was reached after Ben Bernanke’s speech regarding economy, interest rates and ending of stimulation process. Since the sentiment for US dollar is bearish the data has to be much better than expected in order to stop the greenback from falling. If it simply meets the expectations you should not be surprised to see dollar continuing on its’ downtrend path. This should also be reflected in eur/gbp rise and gbp/chf fall. There is pretty good correlation among the above mentioned pairs. I keep on selling Pound and US dollar at the moment.