GBPJPY trend & momentum 13-Feb-2015

GBPJPY has risen above 183.0 this week by strong sterling though JPY declined against most of currencies because oftthe announcement by Bank of Japan.

Mark Carney referred they are prepared to cut their interest rate, currently 0.5% , if inflation rate stays lower. However, GBP has been relatively stronger againt other currencies before and after the announcement. It could say the market implies the rate not being cut near future.

Although the long term trend is likely GBPJPY upward trend, the trend and momentum indicates chance of GBPJPY going down in short term for next week.

EURGBP trend & momentum 4-Feb-2015

The trend and momentum has indicated EURGBP downward trend since early today, and it has fallen from 0.756 to 0.749 at the moment.

Following to the previous post, GBP downside risk is uncertain while British interest rate will be reviewed tomorrow. If the rate is unexpectedly cut, GBP could be down steeply and EURGBP will go up under the situation.

EUR is also risky currency due to Greek negotiation with other European lenders.

Under those circumstances, EURGBP is probably volatile short while. 

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Bank of England interest rate decision on Thursday

Bank of England official rate

British interest rate will be reviewed on Thursday 5-Feb, at noon. Currently, the interest rate is 0.50% remarkably low level and the consensus implies it will be unchanged, staying at 0.50%.

However, the downside risk is remained while major economies has unexpectedly cut their interest rate such as Canada and Australia, New Zealand's interest rate is expected be lowered in this year and US could delay lifting up their interest rate.

Today, Chinese central bank decided to cut reserve requirement ratio for banks to increase their lending, which implies more money will be provided into the market.

China cut the amount of cash banks must set aside as reserves in a bid to boost the supply of loans, as capital outflows and weakness at the nation's factories suggest a slowdown in the world's second-largest economy is deepening.
The reserve ratio will fall 50 basis points on Thursday, the People's Bank of China said on its website Wednesday. The level will drop to 19.5 per cent, based on previous statements, while some lenders to rural and small business get bigger reductions.
The PBOC joins more than a dozen global counterparts in easing monetary policy this year as tumbling commodity prices provide scope to support growth. While Premier Li Keqiang told global business leaders last month not to worry about weakening Chinese growth, the latest step signals policy makers are concerned the slowdown has yet to reach bottom.
"You have lot of the world easing monetary policy in a context in which inflation is going down, partly because of relatively slow growth and partly because of falling oil prices," said Edwin Truman, a former Federal Reserve and U.S. Treasury official who's now a senior fellow at the Peterson Institute for International Economics in Washington. China's latest move is "part of that general pattern."

Ref. China joins wave of global easing with cut to bank reserve ratio Read more: http://www.smh.com.au/business/china/china-joins-wave-of-global-easing-with-cut-to-bank-reserve-ratio-20150205-136fns.html#ixzz3Qo9BpDzG


Reserve Bank of Australia (RBA) has cut Australian interest rate 25bp from 2.50% to 2.25% on this Tuesday, which was unexpected though further cut had been concerned.

Posted on Forex Flyer: AUD interest rate review on this Tuesday

AUD interest rate review on this Tuesday

AUD has been declined against major currencies since later January. GBPAUD 1.941, AUDUSD 0.7768 and AUDJPY 91.05 at the moment, and those were around 1.860, 0.810 and 96.0 respectively.

Reserve Bank of Australia (RBA) will review the cash target rate on this Tuesday, 3-Feb at around 3:30 UTC. The interest rate has been at 2.50% since Aug-2013, which is the lowest rate in the last 20+ years.

According to RBA's comment for a last few months, the rate will not hike for next several months. The rate is expected to be unchanged for this review, however AUD is considered relatively higher than the level RBA expects and the interest rate could be cut further.

Already mentioned in previous posts, Australian economy strongly depends on Chinese demands. If Chinese demands start slowing down, RBA could cut interest rate further.