www.TheLFB-Forex.com A Forex Trader Portal
Market Wire Update:
Oil higher, gold higher, equities higher, but Usd values hold steady, and actually favor the long side, instead of moving lower as would be the norm. The markets have absorbed the Bank of England and ECB rate decisions, and now await the ECB Press Conference,after the weekly U.S. Jobless Claims at 08:30 EDT were better than expected at 550k. The forex reaction will raise questions as to whether the market came too far, too fast in regard to the volatile moves made on three occasions last week that drove the dollar lower through a support area that had held for a three month trading channel.
We questioned how far the major pairs could go without a pull-back to support, and now we have the answer; they may not be able to go any further until some steam is taken out of the major pair valuations. The market will now focus on every word that Jean Claude Trichet speaks on Thursday, because at $1.44 per euro, there is a lot of expectancy that the ECB are dealing with growth issues sometime soon.
Fair value concerns on the major pairs will be added to by news, that instead of giving notice that it will be cutting its existing bond purchase program that was put in place to stimulate the economy, the Bank of England announced that it would actually be adding 50b pounds to the program, that now totals 175b pounds of liquidity relief to an economy that is not as robust as the analysts may have thought. The market took their cue and quickly decided that at $1.70 they had overshot the value of the pound, and possibly by a large margin.