Trading Plan – Monday 20th June 2022: Central banks get aggressive
Last week was busy with lots of central bank action. On Wednesday the Fed delivered a 75 basis-point rate hike which had only just become the market’s expectation the previous Friday when CPI came in hot. It took a while for the markets to react but eventually equities sank on recession fears.
The ECB held an unscheduled meeting, the worry being rising bond yields in the less robust economies in the Euro Zone. There is word of a new “tool” to fight the problem, but no details were forthcoming.
The Bank of England delivered a 25 basis-point hike as expected and talked tough if inflation becomes more persistent. Governor Bailey seems to be giving mixed messages as not so long ago he said the UK economy couldn’t take much more hiking.
Finally, the Bank of Japan maintained their rate, as expected, but said they have their eye on the weakening Yen.
Elsewhere, on the economic calendar, there was a lot of red. The UK missed on April GDP and employment; the US and China missed on Retail Sales and oil stocks grew unexpectedly.
I placed no trades.
This week should be less action-packed. I see UK inflation on Wednesday and Services PMI on Thursday as highlights. My bias on the GBP is bearish and the currency is sensitive to bad news.
As always, I go through my trading themes for the week in the video.
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