Yep - the market view is that the Japanese are by nature savers and investors - in times of risk off they sell those investments and repatriate to Yen - thus applying selling pressure to USD.
Hmmm⌠total baloney - XAU/USD is the no.1 risk indicator - thatâs always what we have been told, and not much sign of buying in the past month:
Edit: the yellow line is back a couple of years.
Anyways to finish up, and it does have an impact on Eur/Gbp in the past week, here is the complete chart on Xau/Usd :
The answer is clear and confirmed by todayâs numbers. The UK govt has yet to wake up but at least the BOE are more aware.
The latest DT now also history.
That was May 19th - the 90 level was always the target for a no change FA situation, that level finally reached this week.
On the same day that the 90 level was reached (July 9th) cable made itâs low of this year.
Hence I mentioned in that same post:
Anyways - all left side stuff, what now on the right side of the chart?
The FA is stuck in that there are only two possible outcomes for a new UK PM. Boris Johnson is the likely winner and is seen by the market as the more probable to exit the EU on WTO terms - if so then negative GBP.
Hunt is seen as more likely to listen to business and should he win then GBP positive.
So a period of consolidation on GBP until the outcome becomes clear.
Final post in this thread:
The result of the PM election will be announced in a weekâs time - if the numbers already mean that Hunt cannot overtake Johnson then it could be sooner.
The fact that there has been no such announcement to date could suggest that a number of voters have been holding back (there was a report last week that Johnson had already clinched it).
If it is the case of holding back then this will help Huntâs chances because Johnson has not run an especially good campaign.
I see on another thread a suggestion to sell Eur/Gbp based on TA - given the importance and possible impact on GBP taking up a TA position right now could be risky.
Take care yâall
One quick post if learning FA - the above quoted post was one month ago - so a simple short re the âlikelyâ election of Boris Johnson - worth over 500 pips.
Looking at the right side of the chart - is there a likely change up ahead?
Perhaps the best analysis I have heard in a long time comes from Jonathan Powell, British diplomat and experienced negotiator - itâs 6 mins long - worth a listen to help understand:
Intended to post on this thread this morning re Eur/Gbp and Gbp in general but events overtook, only getting the time now.
Last night the Spectator magazine published a memo from No.10, seemingly written by Cummings - special adviser to the UK PM.
The memo was a anti Irish rant in particular and anti EU in general, more worryingly there was a British threat to withdraw all cooperation including security matters from countries within the EU and that lack of cooperation would targeted more on countries perceived to prevent Brexit on Oct 31st - a league table so to speak.
By coincidence the UK PM was scheduled to call the German Chancellor this morning - surprise, surprise - the call was frosty - worth a few pips, and possibly some more to come.
End of 2019 in sight, the UK/EU withdrawal bill has finally passed in UK so the stage is now set for the UK withdrawal from the EU on Jan 31st 2020.
The agreement covers how the UK leaves the EU but does not set out the future relationship including finance, trade, security etc.
There is a transitional period, ending on Dec 31st 2020 where everything carries on close to normal, there was a clause for extending that period, such extension has been ruled out by the UK (placed into law on Friday past)
Here is the current position from the EUâs perspective as articulated by Michel Barnier on Friday past.
:
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Expecting undramatic steady rise to GBP price until autumn. After that depends on releases and leaks from the negotiations.
In the early months of 2020 market numbers will be back to the fore.
Most crucial is consumer spending - and the more important months are Dec this year and Jan 2020 (Christmas spending and New Year Sales).
There must not be a miss on these, if there is then you could well see a change to the MPC vote count, so far only 2 members seeking a cut.
Inflation is running well below the 2% target rate, any further reduction on 1.5% will ratchet up the pressure for action.
Bottom line, Iâd be wary of GBP buying right now.
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To be prepared for numbers release itâs possible to have an up-to-date picture of retail spending.
Release date Friday Jan 17 - retail sales and inflation y on y both released 10.30am gmt
Later in early Jan (before Jan 17) check here.
Lol - I see one trader looked up that link.
Now imagine that that same trader looked up that same link this morning - i.e. early Jan, imagine he spotted the news headline
He/she would have read and then sold some Gbpâs
Then this happened
Week one of the roaring 20âs over, incomin week the focus for GBP is inflation and coupled to that retail spending.
Guys that have read the recent retail reports will have a sense of where the numbers are going.
Then at the end of the month comes the driver of price - the Central Bank.
Here again market participants have soundings - not likely that the rate will change but will the count vote change, and if so will it be positive or negatiive?
There are 2 possible waverers - Gertjan Vlieghe and Silvana Tenreyro.
There is a third but I havent yet identified him.
Carney said last week:
âWith the relatively limited space to cut Bank rate, if evidence builds that the weakness in activity could persist, risk management considerations would favour a relatively prompt response,â
Bottom line - reasonable chance of some selling tomorrow on GBP and into the vote count at the end of this month.
Edit:to make it easy for learners of FA:
And to make it completely easy to my line of thought:
https://brc.org.uk/news/2019/worst-year-on-record-for-retail/
Quick thought - GBP has gapped down on the Asian open - no big surprise given the above, now is where a retail trader can take advantage.
Patience and levelsâŚ
Finally this thread has meaning - the UK departs at 11.00pm GMT thuse the beginning for both the new EU and UK.
Trade talks will begin in about one monthâs time.
There are quite a few hurdles to overcome - the first one was mentioned by @Clint in a thread dating back perhaps 2 years, namely the banking and finance sector.
Iâll not bore with a link but basically the UK wants to continue âpassportingâ rights for UK finance in the EU,:
Reuters: Until now, financial firms running EU operations from Britain believed that technical assessments by EU banking, insurance and markets regulators would be enough judge UK rules âequivalentâ to those governing EU-based firms, granting them market access after December.
The EUâs de facto position is that there will have to be agreement on same -yet to be negotiated.
The bad news is that there is talk from the UK banking sector that the EU wish to link any such agreement to Fisheries - the Uk have just published their intended law on fisheries ahead of any talks.
This and many other trade aspects have 4 months to be at least half completed.
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Potential for some movement on GBP this week.
Tweet yesterday from M. Barnier-
A crucial week ahead of us to make tangible progress across all areas, in line with the Political Declaration.
He undertook to brief the press this Friday.
Expectation is that the deadlock will remain - there was talk last month of movement from the EU but No.10 briefed that this was just wishful thinking from the EU side.
The meet between the UK PM and the EC will take place later this month in a likely vain attempt to move forward - deadline for agreement is in 4 weeks - then the talking will stop according to UK.
The EU countries are responding to the economic impacts of the covid crisis just as expected - money for all, provided by the northern European banks, increased state subsidies for big manufacturers, increased state dirigisme of car-makers etcâŚ
I say, Great! let them throw their money at jobs that will not exist in just 1 yearâs time.
I donât want the EU to become poor - we need them to trade with us. But their short-sightedness and interfering tendencies will allow our economy to accelerate away from lockdown and will demonstrate to our voters what happens under such a regime.
This is true - according to the House of Commons library - The EU is the UKâs largest trading partner. In 2018, UK exports to the EU were 45% of all UK exports. UK imports from the EU were 53% of all UK imports.
I wouldnât write off the proposed recovery fund by the EU just yet any more than Iâd write off the UKâs efforts.
Back 10 years there was a crisis - Govtâs response was âausterityâ - this seemed to make sense - high taxes, less govt spending - when that didnât produce the results quickly enough then reluctant money printing - the big fear was the printing would lead to increased inflation and higher interest rates - thus exasperating the economic woes.
Economies are still affected by austerity - oil was USD 112.00 in August 2013
Printing didnât raise inflation - instead austerity decreased it - the spectre of deflation raised itâs head.