Mark Carney Fan club – united MPC into 9-0 to hold QE, looking at other measures and 9-0 on rate hold. ‘The Special One’ living up to his name. Official Unofficial Mark Carney fan club. What we find really useful and interesting is that with clean votes and new chair, we can now really monitor progress again as people change their voting decisions.
Well the much hyped and anticipated Bernanke conference turned out to be much to do about nothing. Statement released early highlighted that ‘Tapering was not on a pre-set path’ and that it could be sooner, not so soon or much later all ‘depending on data’, but so far looks like the plan is to taper in September and look at ending QE in 2014 but they are giving wiggle room. It generally sounded like the committee had taken a more Dovish approach given the response to tapering comments at the last committee and Bernankes remarks last week were a pre cursor for this to ensure this became more of a non event (or are we giving them too much credit?).
Q&A was no real improvement on the statement with Bernanke sticking to the pre-presented text in his answers and the Congress typically focusing on mortgage rates. It struck us as amazing that they had so much trouble with microphones, not entirely sure how they were ever going to put Bernanke under pressure. Bernanke did seem slightly better than normal with an early question on whether a congressman should refinance was meet by very dry Bernanke ‘I’m not a qualified financial advisor’, line, very British dead pan response…bravo.
All in all this resulted in a rather non event of the day, early chop on nothing sustained little movement. Across the board the run up to and initial moves were met with Retail Traders Buying the US Dollar and selling other currencies.
Tomorrow we have UK Retail Sales, which could be key for GBPUSD and its 1.5200 level, we also have initial jobless from the US and more Bernanke testimony. If Initial jobless come in much better than expected, brace yourselves for more taper talk and potentially a strong USD, opposite is true for weak numbers.
EURUSD
RTAS Order Book systems remain long this pair at the 1.3000 level, today’s price action saw markets drive this pair to test the 1.3100 handle but the pair failed to break and hold below. Although the pair closed negative on the day it remained relatively well supported and we could now see a test of the 1.3200 level before a push lower again but expect some chop in this pair.
The Daily chart seems relatively supportive as well with a price rejection off of the 200 day SMA, although we still do like the potential Head and Shoulders pattern. This pattern could see us test the 1.3250 mark before a move lower, key will be finding strong resistance above.
GBPUSD
Markets liked the unanimous voting shown by the MPC minutes today and the less Dovish tone of them pushed the GBPUSD higher initially but it then got caught up in the Bernanke fever.
4hr chart still seems relatively supportive with a nice Pin Bar after the Bernanke testimony. We remain long this pair with our RTAS Order Book system.
Daily chart doesn’t look quite as supportive and a lot will depend on the GBPUSD reaction tot eh 1.5200 level if tested again, if we can hold above then we suspect 1.5400 is in sight if we fail to close above then we could start to see this pair turn lower again.
AUDUSD
We closed our longs nicely last night and with it managed to book a few extra pips. RTAS Order Book systems went short towards the close today after Bernankes testimony as REtail Traders bought the pair. We suspect this could be a correctional move as in order for this pair to push higher it is going to need to lose the heavy Retail Trader long bias.
Daily chart really looks as if it is carving out a bottom in this pair and needs to shrug off some orders to clear some space. We expect further chop but past couple of weeks have been good for clearing out orders.
USDCHF
Order Book systems remain short but are on the edge with regards to switching. Order Books flirted with longs and shorts but remained pretty static at the moment.
We are looking for potential support around the 200 day SMA and 0.9320 level in this pair, if we manage to get some good support at these levels we could easily see a push higher.
EURAUD
With the RTAS Order Book system remains short from around the 1.4400 mark. Retail Traders have started to buy this pair but stalled a little today. For downside momentum to continue we need to see more follow through from them in closing shorts.
If they revert to aggressively short again we could see this pair attempt another run at resistance above at 1.4450.
We maintain our outlook on the daily chart, with the view this pair is setting an interim top. A nice RSI divergence on the Daily Charts and the extremes in the Order Books gave initial clues, we now need to see some follow through in the order book to ensure this isn’t just an initial pull back.
