Sterling has been on a monster tear after mixed employment data out of the United Kingdom. Averages earnings beat expectations of 2.6 percent, printing a 2.9 percent.
However, the U.K. did see a rise in unemployment even as the unemployment rate fell a tenth-percent.
Traders are looking to front from any potential talk out of the Bank of England (BoE) that could hint at a potential rate hike. BoE Governor Mark Carney still pressed that a decision to address interest rates would not be made until the end of the year, likely to figure out how financial markets react to an anticipated hike from the Federal Reserve.
The yen saw pressure, along with the dollar, as risk assets continued their second day of rallying into tomorrow's FOMC minutes meeting and pressure conference (which tends to be the case).
Without a doubt, their will be a good deal of volatility, and it will largely coincide with what Fed Chair Janet Yellen foresees in the near future in regards to the U.S. economy and the potential trajectory of interest rates.
As seen in the early '90s, the Fed could raise rates (although, I doubt they would) and the dollar could actually decline. Depending on how the yen reacts, GBPJPY could potentially break out of an inverse head and shoulders pattern.
Price action have jumped up to the neckline on the 4H chart, but there are a few key things to consider:
1. It is always prudent to wait for a close above the neckline, as a false breakout will suck in traders. 2. The neckline also lines up with a well-established supply zone on the intraday charts.
If price action meanders too long in the supply zone (blue rectangle), momentum could wane causing the pair to retreat.
Conversely, if GBPJPY can close above 187.65 then the pair could attempt 188.55 and 189. If not, a retrace to 186 could be warranted.
Side note: considering that the VIX is currently trading within a descending wedge (bullish reversal), it possible that heightened volatility will strengthen the yen.
whoa hahaha
why people and even oil & gold wanted to hype the rate for no reason
Yeller said NO HYPE!!!
CommoditiesTrader
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Well she kind of hypes it in a way by saying the Fed can hike any time it wants... Kind of like how a smoker says they can quit anytime after 30 years of smoking.
It's all facile.
jangseohee
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if that IHS materialize, that means, no rate hike and market has bottomed and going for yet another ALL TIME HIGH (ATH)?
CommoditiesTrader
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Yes. It can happen if Yellen comes out really dovish IMO. Only way I'd play it is if price action closes above the supply/neck. Otherwise it's likely gonna suck you down. Longer term charts not that great.
CommoditiesTrader
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And that's why we wait for confirmation! I wonder how many traders got sucked in. I think we'll see more weakness in GBP, we'll see.
CommoditiesTrader
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Kuroda didn't say anything too interesting. He expects a "moderate recovery" while assuring QE is having its attended effect, which leads traders to the fact that the BoJ will not like be easing further anytime soon.
UK retail sales at 430 EST should get a lot of sterling action
why people and even oil & gold wanted to hype the rate for no reason
Yeller said NO HYPE!!!