In the spotlight today was not only Mr. British Pound but also the major banks in the US, UK and Switzerland as well, as they face billions in forex fines. Who does this penalty money go to? Not the traders I bet!
It was a quiet day on all major markets yesterday, with light volumes due to Veterans day. The Dollar gave back some of its recent gains against its major counterparts, but does continue to push to fresh highs versus the Japanese Yen.
Bad Boys in the Banks
Foreign Exchange trading became a very expensive activity for a number of banks yesterday as they faced up to fines for their participation in rigging the rates around the 4pm daily price fix. Collectively Citi, JP Morgan, RBS, UBS and HSBC have been fined $3.2bn by UK and US regulators – though this is probably less than the collective profits given the amount of time the fixing could have gone on for. The Bank of England Committee investigating the manipulation also found that no member of the Bank of England was involved in any wrong doing, which will be a relief to Mark Carney and the credibility of the BoE.
Russia’s Falling Currency & Their Deal with Iran
In Russia, their exchange rate continues to fall, but the central bank says that this has helped them offset falling oil prices. So far this year they’re down about 25% against the global currency basket, but oil is only 20% down, meaning that exchanging USD oil income isn’t costing them anymore or distorting their budget. The central bank state that they are fine with an $80 barrel of oil, but are still pessimistic overall about the economy with sanctions.
One thing that might inspire the West to hit Russia with more sanctions is a proposed nuclear deal with Iran. The FT reports that Russian state nuclear company Rosatom are to build eight new reactors in Iran, four in an existing Russian built facility and four elsewhere. The announcement comes, inconveniently, at a pivotal point for Iran, who are hoping to have economic sanctions lifted by the West in exchange for limits to their nuclear program.
It’s Very Cold here in the US – How are Oil Prices Doing?
In the US, the first cold snap since the polar vortex at the beginning of the year hit yesterday. New York and Chicago, where the majority of US energy traders are based, are both facing a week or so of sub-zero temperatures, according to forecasters, the prospect of which sent gas prices above $100 yesterday. Oil prices continue to fall though. News reports of larger than expected oil inventories in the US has helped push the price back down towards recent lows.
Abenomics
Overnight markets have seen optimism in Japan at the possibility that Shinzo Abe will delay the planned second phase of sales tax hikes. Investors are speculating that the PM will delay the tax rise as a way of further fuelling the reinvigorated reinflation drive that was announced a couple of weeks ago. There is also talk of Mr Abe calling a snap election while everyone is in a good mood in a bid to reinforce his political standing. Both pieces of news conspired to push the Yen to fresh lows against the Dollar and the stock markets further into territory not seen for more than seven years.
Mr. British Pound
Today the market is was prepping to be focusing on the Bank of England’s quarterly inflation report from the very beginning of the Trading day. When it finally came out, Mr. British Pound saw the drops we were predicting yesterday and seems to be approaching our bearish targets. The Bank of England sees British inflation falling below 1 percent in the next six months and Governor Mark Carney said markets were right to rule out an interest rate hike any time soon. The BoE predicted a very slow rise in inflation over the next three years and noted how markets were expecting rates to remain at their record low for almost another year.
Intraday Forex Technical Levels
EUR/USD 4-hour: Teasing the 23% Fibonacci level.
Invest Diva Likes: Short positions below 1.2487 with targets at 1.2363 and 1.2299 in extension.
If Pair Goes Nuts: Above 1.2487 look for further upside towards 1.2563 and 1.2624.
What’s up on the Forex Dance Floor: The pair is again teasing the 23% Fibonacci level after rebounding below the Ichimoku’s cloud. The RSI is around the neutrality area.
Supports and Resistances
1.2624
1.2563
1.2487 Pivot Point
1.2363
1.2299
GBP/USD 4-hour: Dropping below the Ichimoku’s cloud.
Invest Diva Likes: Short positions below 1.5892 with targets at 1.5789 and 1.5719 in extension.
If Pair Goes Nuts: Above 1.5892 look for further upside towards 1.5955 and 1.6007.
What’s up on the Forex Dance Floor: The pair is dropping below the 38% Fibonacci level and the Ichimoku’s cloud. The RSI is below the neutrality area.
Supports and Resistances
1.6007
1.5955
1.5892 Pivot Point
1.5789
1.5719
USD/CHF 4-hour: Consolidating.
Invest Diva Likes: Long positions above 0.9648 with targets at 0.9737 and 0.9815 in extension.
If Pair Goes Nuts: Below 0.9648 look for further downside towards 0.9592 and 0.9548.
What’s up on the Forex Dance Floor: The pair is consolidating at the 23% Fibonacci level just above the Ichimoku’s cloud. The RSI is around the neutrality area.
Supports and Resistances
0.9815
0.9737
0.9648 Pivot Point
0.9592
0.9548
USD/CAD 4-hour: Consolidating.
Invest Diva Likes: Short positions below 1.1317 towards 1.1272 and 1.1226 in extension. .
If Pair Goes Nuts: Above 1.1317 look for further upside with targets at 1.1372 and 1.1463 in extension
What’s up on the Forex Dance Floor: The pair broke below the 38% Fibonacci level while approaching the lower band of the Ichimoku’s cloud. The RSI is belowthe neutrality area.
Supports and Resistances
1.1463
1.1372
1.1317 Pivot Point
1.1272
1.1226
