UK money markets view today’s elections as a non event and meaningless. I don’t believe money markets care who wins. The Trump victory normally brings ideological counterparts to power and May is the person for the job. GBP today will function as the same old GBP in past days. Focus on the downside today. As long as Brexit negotiations are underway and not complete, BOE to raise interest rates may not be seen until Brexit is settled and until the UK economy comes back to life.
As I read past minutes in succession, the BOE board appears settled to not raise anytime soon. Kristin Forbes term is up June 30 and likely will be replaced by another lefty loonie to vote rate increases meeting after meeting. From 2003 to 2005, Blanchflower and Bean were the lone dissenters on the board and voted meeting after meeting in opposition to majority board members. This is nothing new in BOE land.
The unanswered question for Draghi is bond purchases of 80 billion Euros per month from now to eternity accomplishes what economic goal or is the goal to contain for longer periods Euro at lower levels. What is the overall reason for purchases of 80 billion against an 11 billion M3. Will 80 billion contain interest rate rises long into the future. Questions never answered in research. Inflation should never become the story, GDP higher must be the goal and result. Forget the economic question as any rise in GDP in light of stimulus is a luck stroke from the averages rather than a result to stimulate. Draghi today may promise and forecast economic improvements but it never materializes.
Overbought EUR/USD will struggle to travel higher from 1.1293 to 1.1322. The break point above is 1.1327. We’re selling today 1.1293 to 1.1322 and 1.1327 if we catch it. If Draghi sends prices higher then we have a market sell gift. EUR/USD forcus is on the downside as plenty of daylight exits. First points below are 1.1208 and 1.1202 then 1.1173 and 1.1144. Sell the tops and buy the bottoms.
GBP/USD hits the richter scale at 1.2997 to 1.3022. The break points above are 1.2990, 1.3010 and 1.3042. Any GBP rises is a sell gift. Downside must break 1.2940 and 1.2919 then 1.2899. Overall GBP big break points are located at 1.2759 and 1.2629. Above range break is 1.3155.
AUD/USD must break 0.7542 yet AUD will struggle at from 0.7570’s to 0.7590’s. Focus on downside.
Overbought NZD/USD faces massive resistance at 0.7229. Focus on the downside to 0.7166 and 0.7168.
Oversold USD/CHF should cruise to 0.9675 and 0.9691.
USD/JPY Break points 110.34, target today 110.06. Bottom breaks 109.30 and 109.11.