USD UP OR DOWN WILL BE DECIDED THIS WEEK AS THE ISSUE ON INFLATION REMAINS A BOOGEYMAN!!
After prolonged visions of nirvana, investors are suddenly having nightmares again about an old bogeyman: inflation. The Dow Jones Industrial Average lost 9% of its value in the past two weeks, a stunning drop from a record high triggered by the fastest increase in worker pay in nine years.
The U.S. economy is stronger, wages are rising, labor shortages are worsening and “now you have all the fiscal juice,” said senior economist Sal Guatieri of BMO Capital Markets, referring to recent tax cuts and increases in government spending. BMO predicts PCE inflation could hit 2.4% in 2018. Yet Guatieri also doubts inflation will get out of hand. After all, it’s been a decade since inflation reached 3%, and a lot has changed since then. What’s been keeping a lid on inflation over the past five years includes a greater move toward automation, stiffer global competition and an explosion in shopping on the internet. READ MORE @ https://www.marketwatch.com/story/inflation-fears-haunt-wall-street-again-but-investors-might-just-be-having-a-bad-dream-2018-02-10?siteid=rss&rss=1
WHAT IS THE USD INDEX SAYING?
USD INDEX IS SEATING AT RESISTANCE; the question now is all about which direction the USD will take this week? We believe the USD has more downside then upside for now as China soon overtakes USD and become biggest consumer and also the biggest exporter in the world. We stick to SELL USDCNH.
MONDAY NEWS THAT MIGHT AFFECT YOUR TECHNICAL CHARTS
- UK & US CPI this week – be cautious as you expect massive volatility.
- 4.15pm – SNB will release their CPI and is expected to be good. We maintain SELL for USDCHF.
- 5.50pm – UK MPC member will speak and is expected on the hawkish side – inflation matters.
The pound dived after the EU’s chief Brexit negotiator warned a transition deal is ‘not a given’ –
- Sterling dived after Michel Barnier said a deal on “transition is not a given.”
- The currency dropped close to 0.8% against the dollar on Friday afternoon.
- On Thursday, sterling spiked on news that the Bank of England is set to raise interest rates further in 2018.
The pound has dived on Friday afternoon after Michel Barnier, the EU’s chief Brexit negotiator warned a transition deal between Britain and the bloc is ‘not a given’ if the UK remains inflexible on certain areas of negotiations. “The UK insisted that we should reach an agreement in March on transitional period. However, at the same time, our partners set out a number of disagreements which I see as substantial,” Barnier said at a press conference in Brussels on Friday. “To be frank, if these disagreements persist, transition is not a given.” Read More @ http://www.businessinsider.com/pound-against-dollar-price-falls-brexit-transition-barnier-comments-2018-2
We focus on GBP & EUR pairs this week.
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