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.

Which falls Euro or Pound?

As two very important events are scheduled for today one may wonder which currency will fall and which one will rise. United Kingdom has to release Forex news first. Bank of England will deliver their decision about interest rates and Bank chief should also deliver some speech about central bank’s financial policy. I am bullish towards Pound and bearish towards Euro at the moment. However, I will concentrate more on gbp/chf and gbp/nzd pairs. These look most attractive at the moment. Pound Franc pair has to clear 1.4500 level to confirm bullish bias. I buy above that price area. 

Euro, on the other had looks kind of bearish. I am looking at eur/nzd now and the technical structure of it is very bearish. So, it looks weak against commodities and today’s event might change the course for Euro against commodities, but nobody knows what will happen to eur/usd, eur/jpy and eur/gbp pairs. Euro US dollar pair seems to be sitting on support as well as gbp/usd pair. So, it alludes to the idea that the greenback might fall. I also do not rule the chance of Euro forming double bottom patterns in commodity currencies on hourly charts. Whatever happens, be sure to be on the same side as the market. 

See you tomorrow with more updates.

Purchasing Manager Index EU and GB

Today we had two pieces of mid importance data from European Union and United Kingdom. It was Purchasing Manager Index Services. Both releases have already come out. The data from Europe was worse than expected: 48.3 actual versus 48.6 expected. The news came at 08:00 GMT. The market did not react to that as it was waiting for the release from Great Britain. It came half an hour later at 08:30 GMT. And the data was far much better than expected: 56.9 actual versus 54.5 expected. 

A lot of British Pound pairs soared and will probably continue their ascent as market participants expect some bullish position from tomorrow’s UK interest rates event. I personally, expect gbp/chf to climb higher past 1.4500 level that is a significant barrier for the pair to proceed higher. Whether it takes this level or not entirely depends on the Bank of England position. I intend to trade this Forex news with very tight stops and expect to make some money. Interest rate decision also comes from European Central Bank. Do not forget that post event conference is more important that the release itself as the president Draghi should deliver some kind of statement about the bank’s decision as well as some kind of guidelines regarding future financial policy of ECB.

GDP release breaks British Pound

I did not mark today’s Great Britain release on its’ Gross Domestic Product by mistake. You see I follow dailyfx calendar and they have statistics on which release has the highest impact on markets. I usually skip those that are of medium importance. However, it turned out that they marked today’s release as of medium importance and this fooled me. I actually had a long in gbp/chf from yesterday, which was not out right when the news hit the wire. It’s no wonder that Pound fell across the board. 

Open 15 minute charts in various British Pound pairs to see what happened. I follow 7 Pound denominated pairs and I can clearly see that ‘the cable’ (British Pound) was beaten in all of them. The biggest drop was probably in gbp/jpy. It collapsed around 70 pips. The second best pair to trade the news would have been eur/gbp, which has much higher pip value than most other pairs. It is not very volatile, but today its’ behavior was extraordinary. It rose around 40 pips, which would probably be equal to gbp/jpy fall or even worse. I am still positive on some Pound pairs, but they have to clear their technical resistance levels before real bullish price action is confirmed. 

I will expand more on this in tomorrow’s update.

GB news fails to lift Pound

British Pound started going down a few hours before very important Bank of England Stability Report was released. It stabilized minutes before the release and now after the release all Pound pairs seem to be consolidating. Pound is generally weak, especially against New Zealand, Australian dollar and US dollar. The only currency that it seems to be strong against is Swiss Franc. 

I currently have longs in gbp/chf pair and planning to keep it till 1.4800 level. I expect the area to be reached by the end of the week. The pair seems to have formed double bottom pattern and is now trying to break 1.4500 resistance level. If news from Germany tomorrow and Friday is more negative than positive this resistance will not hold and the above mentioned take profit target will be reached as I have planned. 

I have no real ideas why commodity currencies are rallying, but it could be connected with some stability coming back from China. In my opinion, this counter trend move in Aussie and Kiwi pairs will be short lived and we will have good opportunities to sell rallies and go in the direction of the main downward trend. 

You can see how individual currencies doing here: http://seekingalpha.com/data/currencies

GBP CPI better but Pound falls

Today is one of those days where most traders do not understand what happens. A much awaited Great Britain CPI numbers were released today and the data came out better than expected. However, British Pound fell against major currencies. Neither me, nor any Forex specialist would be able to explain what and why it is happening, but it does happen from time to time. Does it mean that big market dogs want to take British Pound lower? Maybe, anyway there is even more important news scheduled for Pound tomorrow and that is Bank of England minutes. 

I hope this data will be accepted in a logically understandable fashion and the direction of the currency will reflect its’ fundamentals and not some big boys sentiment. I am slightly bullish in gbp/chf (lost on a small long position today) and intend to long gbp/jpy tomorrow if the current resistance is taken out.