Some high level musings

Central bank policy decisions dominate the calendar this week. Here's what's to come throughout the Europe/US session crossover:

  • The US Fed Reserve meets Wednesday
  • The Bank of England meets Thursday
  • US ADP and NFP employment data this week

With the above major economic calendar action in mind, my forex market focus is going to be on Cable and the USD side of the pair.

From a positioning point of view, it's interesting to note that the USD didn't see strength from the big GDP number on Friday. It was a big number, but with Trump talking up a 4.8% print (and some of you on this blog even saying it was a certainty), the market expected more.

If you take this train of thought, you wont expect price to break any major levels to the upside.

The decisions to come

Some further high level musings of mine.

The Fed:

  • Expected to stay unchanged with an outlook for gradual rate hikes.
  • Market almost fully priced in a September hike.
  • US dollar index at resistance post GDP.
  • The thinking here could be that expectations were/are still overdone and the path of least resistance is to the downside for now.

The Bank of England

  • Expected to hike rates to 0.75%
  • Would be the highest since 2009. That's 9 years ago if you want to feel old!
  • Cable is putting in a really interesting base pattern just above higher time frame support.
  • Cable has stayed relatively strong these last few weeks and if the DXY is going to roll over, then Cable is going to get the rally that it's possibly setting up to give.

I'll break up the charts and levels around what I've spoken about here as we get deeper today.