something interesting

<  BACK TO Mr. Markets

Living in the now

Living-in-the-now_FXPIG

Opinion, Sentiment or fact?

In the coming week, the Bank of England will meet to decide on Monetary Policy. This meeting is eagerly awaited by traders who see it as pivotal to the short/medium term fate of the pound since there is high expectation that they will raise interest rates for the first time in over a decade year.

In the grand scheme does it really matter if they hike or not? FX trading is more about opinion than fact. The guys (or gals) who trade medium term (four-hour charts and above) using all means at their disposal, will have looked at those charts and decided based on their opinion about what will happen, and positioned themselves accordingly.  

So, what will be the outcome of the Central Bank’s actions? If they hike will the pound rally? It ought to as it will mean that the interest rate differential will widen between the pound and the common currency and will narrow against the dollar where monetary policy tightening has already begun.  But, and it’s a Kardashian sized but, whether rates will be raised or not has been the major driver for sterling this week!  So, the fact of a rate hike is a single moment in time, but the market spends weeks trading on opinion and sentiment and the merest hint of time on fact.

Get involved

This is where I depart from my trading mantra.

It isn’t an epiphany just a far easier way to get my point across! I doubt this is news to many, but it illustrates perfectly what I am getting at. Charts are the perfect gauge of opinion. That is, in my view, their most basic use to a trader. They reflect perfectly sentiment, opinion and the actual putting your money where your mouth is actions of trading. So, this week, Sterling has reacted to the various macroeconomic releases that have happened but only in the context of how it will affect the Bank of England’s decision next week.  

Then we move to the next fundamental. Since there is a full week to go, an opinion isn’t important, the reading of sentiment is. The basic premise for sterling is; hike up no change down.  But that action has already taken place.

The release of the decision is a driver for next week, but we need to make money this week and it’s created by what I call the “Sunday lunch” syndrome. In the U.K. we make a huge song and dance about those Sunday lunches. A huge piece of dead animal roasting in the oven, a wide selection of vegetables bubbling away on the stove and any number of side accompaniments to eat it with. It takes all morning to prepare and serve then it is all over in about ten minutes.

There is another analogy I use as well, but this is a family show!

But then there is always Brexit.

Talk about opening Pandora’s Box!

David Cameron sits in his country house contemplating. On his mantlepiece (figuratively) is his award as the most divisive politician this country has seen since Margaret Thatcher. In fact, he is probably even more divisive since he sowed the wind and left the country to reap the whirlwind.

The trajectory of Sterling, since the negotiations started and the gulf between the two sides became apparent, is an even more vivid illustration of what I mean, albeit a longer term one. Is there a trader anywhere who doesn't have an opinion on Brexit? There is no doubt that it will either mean a very long (Games of Thrones long) economic winter or an extended period where the economy falls into recession then gradually (very gradually) recovers. Either way, it must be bad for the pound.

Parity is a strange word. Its dictionary meaning is “the state or condition of being equal”. However, in FX terms it is far from that. The Euro fell well below parity not long after it came into being versus the dollar. The pound once flirted with parity also against the dollar. Now, there is a real possibility that the pound will reach parity against the common currency in the aftermath of Brexit.

But why isn’t it already there? That confirms what I already said. All traders have an opinion of where the pound will be after 29th March 2019 or whenever Brexit happens but that doesn’t mean anything when Mario Draghi is confirming just how dovish the ECB is or Donald Trump is getting into another argument with Congress or teasing the market over the next Fed Chair.

Opinion, Sentiment or fact?

In the coming week, the Bank of England will meet to decide on Monetary Policy. This meeting is eagerly awaited by traders who see it as pivotal to the short/medium term fate of the pound since there is high expectation that they will raise interest rates for the first time in over a decade year.

In the grand scheme does it really matter if they hike or not? FX trading is more about opinion than fact. The guys (or gals) who trade medium term (four-hour charts and above) using all means at their disposal, will have looked at those charts and decided based on their opinion about what will happen, and positioned themselves accordingly.  

So, what will be the outcome of the Central Bank’s actions? If they hike will the pound rally? It ought to as it will mean that the interest rate differential will widen between the pound and the common currency and will narrow against the dollar where monetary policy tightening has already begun.  But, and it’s a Kardashian sized but, whether rates will be raised or not has been the major driver for sterling this week!  So, the fact of a rate hike is a single moment in time, but the market spends weeks trading on opinion and sentiment and the merest hint of time on fact.

Get involved

This is where I depart from my trading mantra.

It isn’t an epiphany just a far easier way to get my point across! I doubt this is news to many, but it illustrates perfectly what I am getting at. Charts are the perfect gauge of opinion. That is, in my view, their most basic use to a trader. They reflect perfectly sentiment, opinion and the actual putting your money where your mouth is actions of trading. So, this week, Sterling has reacted to the various macroeconomic releases that have happened but only in the context of how it will affect the Bank of England’s decision next week.  

Then we move to the next fundamental. Since there is a full week to go, an opinion isn’t important, the reading of sentiment is. The basic premise for sterling is; hike up no change down.  But that action has already taken place.

The release of the decision is a driver for next week, but we need to make money this week and it’s created by what I call the “Sunday lunch” syndrome. In the U.K. we make a huge song and dance about those Sunday lunches. A huge piece of dead animal roasting in the oven, a wide selection of vegetables bubbling away on the stove and any number of side accompaniments to eat it with. It takes all morning to prepare and serve then it is all over in about ten minutes.

There is another analogy I use as well, but this is a family show!

But then there is always Brexit.

Talk about opening Pandora’s Box!

David Cameron sits in his country house contemplating. On his mantlepiece (figuratively) is his award as the most divisive politician this country has seen since Margaret Thatcher. In fact, he is probably even more divisive since he sowed the wind and left the country to reap the whirlwind.

The trajectory of Sterling, since the negotiations started and the gulf between the two sides became apparent, is an even more vivid illustration of what I mean, albeit a longer term one. Is there a trader anywhere who doesn't have an opinion on Brexit? There is no doubt that it will either mean a very long (Games of Thrones long) economic winter or an extended period where the economy falls into recession then gradually (very gradually) recovers. Either way, it must be bad for the pound.

Parity is a strange word. Its dictionary meaning is “the state or condition of being equal”. However, in FX terms it is far from that. The Euro fell well below parity not long after it came into being versus the dollar. The pound once flirted with parity also against the dollar. Now, there is a real possibility that the pound will reach parity against the common currency in the aftermath of Brexit.

But why isn’t it already there? That confirms what I already said. All traders have an opinion of where the pound will be after 29th March 2019 or whenever Brexit happens but that doesn’t mean anything when Mario Draghi is confirming just how dovish the ECB is or Donald Trump is getting into another argument with Congress or teasing the market over the next Fed Chair.

lastest Articles

Market Analysis
Dollar Recovers Fed Driven Losses on Safe-haven Flows
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB’s Draghi: International trade is main reason for slowdown
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
BoE: No surprises here – Deutsche Bank
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold climbs to session tops, further beyond $1310 level
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold loses momentum, edges lower toward $1300
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
BOJ’s Kuroda: “We will mull more easing if price momentum is lost"
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
FOMC Preview: What 17 major banks are expecting from March meeting?
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 19.03.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold Technical Analysis: 18.03.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Fed is likely to signal just one more rate hike – Danske Bank
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY -18.03.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD fades a knee-jerk bullish spike to levels beyond 1.3300 mark
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
AUD: RBA market pricing absorbed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: USD bounces alongside T-yields in Asia; UK politics/ Brexit in focus
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD remains bid and flirts with 1.1300, looks to Brexit, data
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 13.03.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold adds to gains beyond $1300 mark, hits 1-1/2 week tops
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR: Shorts restrained
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY-12.03.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Brexit and US CPI amongst market movers today
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY -11.03.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD/CAD struggles to gain positive traction, but holds above 1.3400 handle
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD: Bounce is likely - Commerzbank
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD Pound Fails to Capitalize on Dollar Stumble Ahead of Brexit Votes
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold clings to recovery gains above $1290
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB: All focus on TLTRO announcement
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
US: Focus on Fed speak and trade data
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 06.03.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
BoC: Policy rate likely to remain unchanged - Rabobank
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD slides back closer to session lows, focus shifts to Carney's testimony
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold consolidates in a range, hangs near 6-week lows
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Antipodeans slip on China woes; Eurozone/ UK services PMI eyed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD: Prohibitive?
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD drops to session low, bulls struggling to defend 1.3200 mark
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Risk-on amid US-China trade optimism; UK construction PMI – Up next
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Global growth hinges on China’s Big Week
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold Technical Analysis: Bears await a sustained break below 1-month old trend-line support
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/JPY Technical Analysis: The cross now targets the key 200-day SMA
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Yen weakest in Asia risk-on; focus on UK PMI, Eurozone CPI
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold bears looking for a break of the $1,300/oz level to 38.2% Fibo target
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD turns flat below 1.14 as DXY clings to gains above 96
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 28.02.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Oil: Prices stabilising
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Brexit to remain in focus this week
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold edges lower to $1325 level, focus remains on Powell’s testimony
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD within a tight range near 1.1350, focus on Powell
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold drops below $1330 as USD recovers modestly
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/JPY challenges 2-day highs near 125.80
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 25.02.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD/CAD Canadian Dollar Higher on Stronger Oil and Softer Dollar
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD eases from tops beyond 1.1350 post-IFO
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 22.02.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/GBP flirting with highs near 0.8700, focus on Brexit
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD struggles for direction near 1.1340
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today: Aussie sees big moves in Asia; Eurozone flash PMIs, ECB minutes – Up next
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
FOMC Minutes Preview: Major Banks expecting a reiteration of a dovish message
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD: Range preserved – Commerzbank
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
BoJ’s Kuroda: Doesn't believe current BoJ policy is weakening the Yen
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Comments from Fed’s Mester show balance sheet decision may come as early as March
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold bulls seeking out a run to $1,360/oz while now testing out 10-month highs
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD returns to 1.1300 on mixed German, EMU ZEW
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD eases from 3-day highs above 1.1330
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold bulls take a breather just ahead of $1326 level, or multi-month tops
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
ECB to stay on hold in 2019-20 – Rabobank
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Dollar Falls as Trade Optimism and Domestic Uncertainty Take Their Toll
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Oil: Prices are undervalued given the current supply uncertainty - Rabobank
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD rebound from 2019 lows, back around 1.1280
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold hits 2-week tops, around $1320 level amid global growth concerns
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD – Euro shrugs off soft German, eurozone GDP
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD falls to 1-month low, 1.2800 mark back on sight
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD is sitting at key support level
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD/MXN holds bullish tone, near 19.30
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD recovers above 1.13 as greenback continues to weaken
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD: Downside seems limited in 2019 - Westpac
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD depressed and closer to 1.1300
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 11.02.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
China stocks climb after holiday break, driven by trade-deal hopes
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Dollar’s next move depends on Trump’s trade progress and border wall funding concession
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
We see risk that EUR/USD could retreat towards 1.12 on a 3 to 6 mth view - Rabobank
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD spikes to fresh session tops, around 1.2970 level
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (07.02.2019)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold Technical Analysis: Descending channel/200-hour SMA confluence region to cap goodish intraday bounce
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/JPY Technical Analysis: Bulls trying to defend descending channel support ahead of BoE
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EU slashes euro-zone growth forecast to 1.3%, Italy only 0.2% - EUR/USD pressured
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold slides to $1312 level
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD rallies over 40-pips from 2-week lows, refreshes session tops
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD: Choppy?
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Wekly Results
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Soft Dollar and Strong Stock Market Supported by Dovish Fed and Strong US Economic Data
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY-01.02.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD continues to consolidate
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (31.01.2019)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/JPY drops to 6-day lows near 124.50
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Brexit: Drop the backstop and create a customs association, Ifo economists say
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (30.01.2019)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
AUD/USD: Upbeat inflation pleased Aussie bulls before Fed meets
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD Technical Analysis: Upside stalled near the 100-day SMA
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (29.01.2019)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Why the Fed may not announce a change to its balance sheet plan on Wednesday
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD drops to session lows, recovers to 1.3150 as Brexit Plan B debate continues
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613