Pound respecting the FIB Extension zone! Down we go...
Chart from last month:
Sterling has surrendered another big figure to the resurgent Dollar, and Cable is now in danger of letting go of 1.3800 following a couple of forays beyond 1.4000, while the Pound has also retreated against the Euro after testing, but not breaking 0.8600 yesterday.
A quick look at the Dollar index and its latest exertions effectively tells the full story, as it extended gains beyond all remaining technical and psychological barriers on the way to topping 92.000, but the impetus behind the most recent rally came from another jump in UST yields following an address from Fed chair Powell that did not match considerable if not consensus expectations for some form of policy response. Explicitly, a significant proportion of the ‘market’ was looking for a QE twist, WAM or sign that expiring SLR exemptions might be extended, but were left disappointed and the Buck proceeded to breach upside chart levels that were proving tough to scale convincingly, like the 100 DMA. NFP looms next, but in the current environment only a real shocker and worse than the last payrolls miss is likely to stop bond bears and Buck bulls in their tracks, and even in that event the latter may benefit from heightened safe-haven demand if equities suffer on labour market concerns rather than long term rate angst.
Sterling has surrendered another big figure to the resurgent Dollar, and Cable is now in danger of letting go of 1.3800 following a couple of forays beyond 1.4000, while the Pound has also retreated against the Euro after testing, but not breaking 0.8600 yesterday.
A quick look at the Dollar index and its latest exertions effectively tells the full story, as it extended gains beyond all remaining technical and psychological barriers on the way to topping 92.000, but the impetus behind the most recent rally came from another jump in UST yields following an address from Fed chair Powell that did not match considerable if not consensus expectations for some form of policy response. Explicitly, a significant proportion of the ‘market’ was looking for a QE twist, WAM or sign that expiring SLR exemptions might be extended, but were left disappointed and the Buck proceeded to breach upside chart levels that were proving tough to scale convincingly, like the 100 DMA. NFP looms next, but in the current environment only a real shocker and worse than the last payrolls miss is likely to stop bond bears and Buck bulls in their tracks, and even in that event the latter may benefit from heightened safe-haven demand if equities suffer on labour market concerns rather than long term rate angst.