Wednesday's FOMC outing showed the Powell Fed to be less model-driven than its predecessors, but the lack of any language confirming four 2018 rate hikes sent the dollar plunging lower.
Article / 14 July 2016 at 23:40 GMT

US Market Wrap: Carney fiddles while GBP bears burn

FX Trade Strategist /


  • China: GDP 2200 GMT 
  • China: Industrial Production 2200 GMT 
  • China: Retail Sales 0130 GMT                                                     

US Data released

  • Initial Jobless Claims (Actual 254,000 vs. forecast 265,000) 
  • Producer Price Index-June (Actual 0.3% vs forecast -0.1%, y/y)

The New York day started with a bang.The Bank of England left interest rates unchanged despite Mark Carney’s comments post-Brexit hinting at a rate cut.

The 0.0270 point, nearly instantaneous spike to 1.3474 from 1.3204 immediately prior to the announcement was evidence that a lot of traders too Carney at his word. As Monty Python fans would say: “Silly buggers”.

GBPUSD quickly retraced half of the move and spend the rest of the day in a 1.3290-1.3350 range.

Once again, EURUSD mirrored GBPUSD moves albeit in a much smaller range, rising to 1.1165 from 1.1095 and then back down again. USDJPY seemed immune to the sterling rally, perhaps because it had its own rally earlier in the day.

US equity indices had another good day but closed a tad lower from their intraday peaks. JPMorgan’s (JPM: NYSE) announcement of better-than-expected quarterly earnings set the tone for the day.

Traders pretty much ignored today’s US economic data (PPI and Jobless Claims) even though they were stronger than predicted.

WTI oil prices churned within a $44.97-$45.77.barrel band and didn’t event threaten to test the intraday downtrend line at $46.10/b. The softer tone in the US dollar against the majors probably helped the rally.

The Bank of England left interest rates unchanged despite Mark Carney’s
comments post-Brexit hinting at a rate cut. Photo: Flickr


Is Boris Johnson a flake and his appointment a fluke? For the answer read TradingFloor Managing Editor, Martin O'Rourke's article: Saxo on Brexit: Is May Johnson's straight (wo)man?

--Edited by Adam Courtenay

Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to
engage with Saxo Bank's social trading platform.

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