Daily Alert: For Friday 4th December 2015

Mark Nugent 2015 H2, Daily Alert

Today’s slides are HERE.

Today’s Economic News

Late last night (UK time) Federal Reserve Chair Janet Yellen said “On balance, economic and financial information received since our October meeting has been consistent with our expectations of continued improvement in the labor market.” So, more fuel to the fire for a 16th December rate hike. This and good UK Services PMI caused the GBP to rise.

Of course today’s major news was in Euroland. What a mess. The FT released a statement a few minutes before the announcement saying there was no rate change. There was huge volatility BEFORE the announcement on the M1 chart. The rate was reduced by 10 basis points. But not the normal Minimum Bid Rate, it was the so-called deposit rate that was reduced. Draghi then massively under delivered on his previous rhetoric by limiting “new QE” to extending the time period until 2017. No mention of increasing the amount or starting to buy private sector bonds. Apparently, according to Draghi, they are doing more QE because it IS working. Draghi then said that it is the deposit rate that drives the thinking on inflation (news to everyone). They also announced a moratorium on all monitory policy members, banning all speeches and meetings with investors for a period of 7 days before any MPC meeting. Total shambles. The Euro rose over 3% on all pairs, as I said it might yesterday if he under-delivered. This does not feel like competence.

20151204 (1)
20151204 (2)

Current Trades

My EURUSD trade was knocked out at breakeven.

20151204 (3)

Other Opportunities

The Euro was not tradable today. Here’s the EURGBP chart – familiar picture…

20151204 (4)

GBP strength takes me into the GBPNZD pair.

20151204 (5)

My stop for the GBPNZD trade is 1000 pips away (yes, 4.3 x ATR of 231 pips, 3% risk). See below. The reason for the large stop is because this is a trade based on fundamentals (weak NZD, strong GBP) and we do not want to get knocked out by short term anti-bias sentiment where short term NZD strength and/or short term GBP weakness may take hold for a few days or even weeks.

20151204 (6)

The alternative trade, NZDUSD, should have been triggered short if you had traded it. (Apologies for saying long last night).

20151204 (7)

M1 Trades

Nothing today.