Daily Alert: For Wednesday 16th December 2015

Mark Nugent2015 H2, Daily Alert

Today’s slides are HERE.

Today’s Economic News

Both UK and US CPI data came in on target and there was no drama. NZ Global Dairy Trade prices yet to publish.

20151216 (1)

On the wider question of risk on/risk off (as of 1630 GMT): WTI (oil) is having its second up day. All the stock markets are up, bar China. There is little movement in bond prices (so no run to safety). The JPY and EUR indices are flat (so again no run to safety). The VIX is down but still above 20 at 22.73. So, on balance, I’d say we are still slightly risk off but less so than yesterday. I will still be cautious and will not trade the USD as tomorrow is the big day…

Euro sentiment so far this week is neutral. The nest step is to return to negative sentiment.

Current Trades and Opportunities

GBPNZD –  I take another small move down today. A lot will depend on tonight’s NZD GDT result and tomorrow’s UK wages growth and then tomorrow night’s NZ GDP.

20151216 (2)

GBPCAD – two days of oil price rises have given the CAD some relief. I will enter short on a pending sell trade just below Friday’s low (which may be very soon). Stop around 2 to 3 x ATR above entry and risk of around 2%.

20151216 (3)

EURUSD – not in position yet AND I will not trade USD until after tomorrow’s Fed announcement.

Major Issues for tomorrow

US Fed rate announcement. First rate increase in 9 years expected by 80% of commentators. It is not safe to be in the market with USD trades when this happens.

UK Average Earnings Index. This is important because this is the missing piece in the rate increase puzzle. Once this steps up, the BoE will be on track for a rate rise. The market expects 2.5%. Any deviation will move the pound.