Current Affairs effect on the market

Aye the ftse is a little tricky - if you do a line chart there is often a ‘V’ sometime in the morning - usually around 10 am (but not exactly so).- most times when that v forms it’s good until lunch time.

Haven’t checked that in a couple of years so could be old news.

One wee thing about TA and FA - this thread has a focus more on FA but just thought a mention on cable this evening and how the 2 combine.

GBP players were maybe surprised this evening with some selling - higher lows and higher highs since … well the beginning of the month - ahhh - profit taking end of week.

Then again there was a DT yesterday the TA guys say - that signalled a sell.

Then again the FA guys shout about the ‘news’ this evening that the EU are prepared to pull the plug on the EU/UK fta if there is no agreement on NI protocol.

This is just the zig zag of FA and TA - why did price stop at the red line this evening on the supposed news?


Edit: you have to go back to Oct 14 - TA rules - or maybe FA rules to take it down there :slight_smile:

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Decided to check if it’s still old news - line chart today of UK100:


I see the V is still on the go - only good until the Yanks come to play :slight_smile:


Latest on Evergrande - thy have posted on wechat that 10 of their projects have re-started work - they posted photos date stamped of construction workers ar work.

Last week it averted a coupon payment default at the last minute.

From Reuters Beijing today:
Evergrande added that its efforts to guarantee construction would shore up market confidence and included several photos of construction workers on different projects, stamped with the time and date.


The above news released before Asia yesterday helped a steady rise aud all day.

But in the last hour there has been a fall - from reuters in the last hour:

Chinese developer Modern Land defaults; property shares drop

Surely, it is better to understand the fundamental factors which have the influence on the currency prices, however I cannot understand the traders who trade on the news solely. Analysing the news is really hard when we talk about forex as it is hard to determine whether this or that event will have any effect on the market and on your trading ideas. You’ve got to have high expertise if you really intend to base your trading on the news.

Hi Virohet and welcome.

Mostly I like to comment on current affairs that are yet likely to impact on price either short term future or near term.

Current affairs differ from ‘news’ in that they set a scene - for example on the BOE rate debate. In August past Reuters poll suggested a rate increase in 2023 - but the tone has changed since then - I commented on the UK’s PM speech made on Oct 6th up above wherein he demanded higher wages etc - and since then cable has risen 280 pips.

And Reuters now report (mid Oct) majority view of a raise in either Feb or March 2022.

Then there is the short term move such as on Aud yesterday - smaller - but imagine that there were guys selling Aud Monday morning disregarding the Evergrande story - they are now under water needlessly.

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I’m behind the curve on this one - Chinese coal futures down - state planner said it would conduct “clean up and rectification” work on coal storage sites.

Reuters this morning.

Aud taking a fall.

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Average thermal coal prices for next year are forecast to ease to 700 yuan from 912 yuan in 2021, Morgan Stanley said in a research note to clients on Tuesday.

Hi Skywalker

Aye saw that on USNews - pressure from Govt seems to working on prtices.

Latest is the FED - inflation outlook is transitory so imminent rate hike off.

USD generally down and stock markets up - that’s how the market is supposed to be.

Tomorrow is BOE’s turn and outlook not as clear - some members of the bank have been saying they view Uk inflation as transitory whereas others are not so sure - the bank is in a difficult position - act too late and inflation will be hard to shift and act too fast and the recovery will stall.

The UK Govt’s OBR reported same day as the UK budget that estimate for GDP contraction is minus 2% ref the pandemic and double that ref brexit. The bank are aware of this so likely will proceed with caution.

Dax and FTSE generally move in tandem but not so these past 2 days - FTSE investors maybe that little more concerned that a shock rise will be announced.

Not so FX traders - pound buyers have not been to the fore for a week - but if a rise they will jump aboard very quickly.

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The BOE did in fact proceed with caution and in their statement they decided no hike and remained very vague as to when this would happen using the words it will be necessary over coming months to increase Bank Rate

The question many market participants are wondering is what time frame is that exactly - coming months could mean as far away as 6 or 12 or 18.

Because of the perceived inaction GBP has been sold and good chance will continue so the short term at least. The OBR statement received little attention due it’s publication with the UK budget but the Bank were clearly aware - thus behave like the classically rabbit in the light.

General consensus this evening is that UK/EU trade war will not happen until after next weekend and the closing summit of COP in Glasgow.

Minister for Foreign Affairs Simon Coveney has said evidence suggests the British government is preparing to trigger Article 16 of the Northern Ireland Protocol, as he warned that doing so could lead to a trade dispute between the European Union and the UK.
The minister said that Ireland needs to prepare contingency plans and will not be surprised now if this happens after the COP26 summit.
(rte 19.23 Nov 7th)

The market will likely look for any positive news this coming week - in the absence of such then reasonable chance of some more GBP selling.

Watch this space :slight_smile:


Couple of updates up ahead.

First Uk retail sales - ONS will publish Nov 19th (Friday week).

The consensus forecast can be viewed next week - the Trading Economics Forecast is +0.5% so likely the consensus will be close to that.

So what about the BRC? - well for the weeks 3rd to 30th Oct21 they report an increase of 1.3%

So watch out for the consensus next week - the market will soon be pricing the increase in and good chance the sellers will exit before by Monday coming.

There was nothing positive - just more reports by politicians both in the Uk and EU of preparations for suspension of the current FTA … that is until today.

EU Commissioner Financial Services being reported by Reuters this evening that the EU will extend permission after June 2022 for UK to clear EU transactions (permission due to expire then)

Prior to this announcement the UK’s Lord Frost briefed the HoL - although still no sign of any breakthrough he did comment that the UK was “not giving up” yet and he wished to remain positive.

(by coincidence the EU commissioner for Finance is Irish)

Maybe just timing coincidence and maybe deals within deals - we’ll know soon enough.

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That inaction i.e. keeping rates on hold was last Thursday (Nov4th) - below 5min chart at time of announcement.

I’ve mentioned a few times a behavioural aspect of Gbp - the 50% move (or kick-off point i labelled it).

If you tried to sell at 1.3600 (red line) then likely you were not filled - well not Nov 4th - there was time however to sell when the dust settled and quite a few did just that.

Notice that the red line is 50% of the drop - switch to hr1 and see this week.


Above 5min Nov 4th Gbp/Usd

Here is that hr1 chart this week with the red line carried forward - see how price worked it’s way back up to where your sell order wasn’t filled - well yours and a few others :slight_smile:


Btw is that a H&S for the TA guys.

hmmm… reports this morning circulating re a softening in EU/UK tensions - Gbp shorts looking for the exit door perhaps.

This from Reuters 1 hr ago:
LONDON (Reuters) - Sterling edged higher on Friday after reports suggesting Britain wanted to de-escalate tensions with the European Union and renew efforts to find a solution over a Northern Ireland trade dispute.

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Consensus now published and it is +0.5%

Before that, Wed next CPI numbers will be published - the expectation is 3.8% - remember that the BoE target is 2% - that in itself will pile pressure on the CB to raise - imagine then if the CPI were to come in a little higher.

General feeling is that BoE is being ‘managed by committee’ - often a cause for indecision, likely numbers will force assertive decision making, when that happens good expectation of more GBP buying.


First of those numbers in today - BoE chairman lately has been banging the drum re labour market - there was concern that the recent end of the furlough scheme would cause an increase in unemployment - not so.

Some Gbp buying this morning - reasonable chance will continue into Friday - let’s see.