It’s not easy to share chart setups with the Nice news flooding across my screens. But it seems that modern markets do not have that problem since they didn’t even react to another major terrorist attack. This is the new normal.
The show must go on and we saw GBP/USD whipsaw up and then back down as Mark Carney and the Bank of England left rates on hold at 0.5% overnight.
As we discussed in yesterday’s ‘bang bang cable‘ blog, market expectations for a rate cut was high, and the rally on last night’s no change highlights the misplaced expectations.
So this decision all but means that markets know that next month is go for a cut, and if the market was short expecting a cut now, how can you possibly be bullish the pair going forward? Well, bar a change in rhetoric from the Fed which we clearly aren’t going to get.
GBP/USD 4 hour
In the decision fallout, price has spiked up to test the GFC low line we have marked on our chart and was rejected quite hard. That level and the gap level that we highlighted yesterday might get some attention near term, but they have to be seen as selling opportunities, surely.
From a good news spike to a bad news spike, NZD/USD didn’t fare quite so well on the day and continues to be crushed in early Asian trade as I type.
NZD/USD 4 hour
Yesterday saw the Reserve Bank of New Zealand opt to provide the market with an extra update on July 21, before it’s already scheduled communications later in the month.
Anything that needs to be communicated by a central bank ASAP must be bad… right? Kiwi traders certainly thinks that is the case anyway.
Lastly for the week, the helicopter money story continues to unfold on USD/JPY:
— Vantage FX (@VantageFX) July 14, 2016
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This is a guest post originally appeared on Vantage FX blog. Reposted with permission.