Former MPC member Blanchflower joins the UK Labour Party's economic advisory committee

The UK opposition Labour Party has announced its panel of economic advisers in a bid to gain credibility Bloomberg report

The group includes former BOE MPC member David Blanchflower,and Nobel Prize winner Joseph Stiglitz

Also on the team are Thomas Piketty, author of best seller "Capital in the 21st Century", Mariana Mazzucato of Sussex University, Anastasia Nesvetailova and Ann Pettifor both of City University in London

Shadow fin min John McDonnell says:

"I am delighted to convene this Economic Advisory Committee that will assist in developing a radical but pragmatic and deliverable economic policy for our country. It will assist in developing a fairer and more prosperous economic alternative based on investment and growth which reaches all sections of society"

All sounds admirable but tomorrow we learn what some of that policy will involve as McDonnell addresses the Labour Party Conference tomorrow

Eamonn has posted this on the plans to lend some support to the UK govt's budget surplus goal

Sources: http://news.forexlive.com/!/labour-20150927

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German committing "economic suicide" in its acceptance of refugees

So says the Czech fin min  Andrej Babis on TV Prima.

• budget spending on handling refugee crisis will hurt the German economy
• system of mandatory quotas for migrants will fail
• most refugees are economic migrants headed to Germany

A reminder of the economic cost of / fall-out from the refugee crisis that I've highlighted here previously

Germany is expected to take 800,00-1m refugees/migrants this year

Eurozone recovery is already fragile and this can only add to the burden

The UK will have its own issues/problems too

    Taking in vast amounts of refugees will have economic consequence

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Forex Afternoon Wrap – 22/09

 

Yen gains as mild risk aversion mood sets in!

Today’s Economic Data:

• Australia HPI q/q 4.7% vs. 2.4%; HPI y/y 9.8% vs. 8.0%
• Swiss Trade balance 2.87bn vs. 2.75bn
• Swiss exports m/m -2.4% vs. -2.3% previously; imports m/m -4.0% vs. -1.8%
• UK PSNB 11.3bn vs. 8.8bn; PSNB ex. banks 12.1bn vs. 9.2bn
• UK CBI trend selling prices -8 vs. -5; total orders -7 vs. 0

Later:

• US HPI
• BoE Shafik speech
• Fed Lockhart speech

The markets opened to another slow day with no major economic releases on the agenda. However, the US Dollar remained on the forefront and continued to surge higher across the board, with the exception of the Yen, which is the top performing currency at the time of writing, gaining close to 0.53%. The Asian session saw the commodity risk currencies come under pressure. The Aussie dollar was the weakest currency of the day losing -0.59% at the time of writing. The decline in the Aussie comes amid the mining sector taking a big hit today. European mining stocks were trading deep in the red as China reduced its growth forecasts as the decline in the country’s appetite for raw materials has seen the commodities trade lower today, and dragging the Aussie dollar along with the rest. The house price Index from Australia which saw a big jump failed to hold the declines in the Aussie. Crude Oil, Gold futures and WTI were all trading deep in the red today.

The Kiwi was faring better compared to the Aussie, although down -0.28% against the Greenback.

The European trading session saw the release of the UK’s PSNB which rose more than expected to 11.3 billion. The British Pound was down -0.40% against the Greenback while the Euro was moderately better in comparison but down -0.29% for the day. The Euro continued its strong decline with the currency now trading near the 1.1135 level of support. A break below could see the single currency decline to the 1.11 level of psychological support.

The US trading session is calm with the exception of the house price index which is expected to print a 0.4% growth, up from 0.2% last month. The remainder of the evening is scheduled with speeches from BoE’s Shafik and the Fed’s Lockhart. Being a hawk, Dennis Lockhart joins nearly three other Fed members who cited the need for a rate hike in 2015. The US Dollar has gained strong momentum despite the dovish Fed outlook. This comes as various Fed and ECB officials, in the past few days have managed to remind the markets of the diverging monetary policies. Although the Fed might have missed hiking rates in its September meeting, the possibility to see at least one rate hike in 2015 is still strong.

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Euro turns upward as US stocks give back gains

2015-09-21 00:00 S&P 500 up just 5 pointsBiotech stocks are under pressure and the Nasdaq has fallen into negative territory. The S&P 500 is up just 5 points to 1963 after rising as high as 1979.One of the catalysts was a tweet from US Presidential candidate Hilary Clinton lamented price gouging in pharma and said tomorrow she will outline a plan "to take it on."The negative correlation with EUR/USD and stocks is rocky at best. We don't need to look beyond Friday for an example as stocks tumbled and so did the euro. However, in general the euro has tended to strengthen on soft stock markets.

Source link: 
http://news.forexlive.com/!/euro-turns-upward-as-us-stocks-give-back-gains-20150921

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China's Li says there is no basis for further yuan depreciation

2015-09-21 00:00 Chinese premier out on ReutersChina aims to develop open transparent capital marketsChina does not want to engage in a currency waraiming for long term stability in capital markets           Chinese premier Li - No currency war with yuan depreciation

Source link: 
http://news.forexlive.com/!/chinas-li-says-there-is-no-basis-for-further-yuan-depreciation-20150921

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GBPUSD moves above broken trend line

Trend line break at the 1.5572 area

The GBPUSD is pushing above topside trend line resistance at the 1.5572 level (see daily chart below). The price is also above the 61.8% of the move down from the August high to the September low. That level comes in at 1.55646  These levels will now be close support for the pair. 

The next major targets comes in at the 1.5670-1.5689 area.  These were swing highs from July.   Then 1.5716-22  

Source: http://technical-analysis.forexlive.com/!/forex-technical-analysis-gbpusd-moves-above-broken-trend-line-20150917

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USD/JPY continues to cruise higher, what's next

USD/JPY now nearly flat on the session

After falling as low as 119.06, USD/JPY is threatening 120.00. Some minor offers may block its path but the place to watch is stocks.

At some point, you have to pick a side in trades like the Fed. From where I stand it's dovish and that's good for stocks and generally bad for the dollar. But one place it's 'less bad' is USD/JPY because the yen slides on risk appetite.

I don't understand why stocks have been under so much pressure. The ebb and flow of a single day is hard to predict or even to understand in hindsight but I think stocks could finish the day higher and that will spell more gains for USD/JPY. I've been buying both today.

Sources: http://technical-analysis.forexlive.com/!/usdjpy-continues-to-cruise-higher-20150918

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Fed Mouthpiece Confirms FOMC Concerns On Global Market Turmoil

Just hours ago, we asked if the Fed's unofficial media mouthpiece had leaked the Fed decision when a WSJ colleague took to Twitter and, quoting Jon Hilsenrath, said the following: "For Yellen, who likes to arrive three hours early for a flight, raising rates without preparing markets would be out of character." To wit:

So did Hilsenrath just "prepare" markets with a two hour advance notice of what to expect? Or did he simply add to the Fed's communication failure by "hinting" the market to expect one thing, while Yellen will unveil the opposite? Not even Gartman has the answer to that.

 Well as it turns out, the FOMC has elected to stand pat in the face of mounting global risks and rising volatility. Employing his hallmark lightspeed, embargo-assisted copy editing skills, the Fed whisperer churned out the following bit of crisply-worded analysis for anyone having trouble interpreting the FOMC statement.
Via WSJ:

The Federal Reserve left short-term interest rates unchanged after weeks of market-churning debate at the central bank about whether it was time to end an era of near-zero rates in acknowledgment of the stronger domestic U.S. economy and job market.

A large majority of Fed officials still believe the central bank will raise rates before year-end, but the central bank showed a bit less conviction on that point. In June, 15 of 17 officials said they expected to raise rates this year, according to official projections released with the Fed’s policy statement; on Thursday the number of people who expected to raise rates this year slipped to 13.

The Fed also indicated in its policy statement trepidations about recent turbulence in financial markets and in economies abroad. “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near-term,” the Fed said. It added that it was “monitoring developments abroad,” a signal of the Fed’s heightened state of worry that slow growth outside the U.S. could hurt the American economy.

The fact most officials still believe they will move rates up this year suggests many believe these concerns will subside in the weeks ahead.

Fed officials have been signaling for months they plan to raise rates this year, seven years after pushing them to exceptionally low levels in December 2008 in response to financial crisis. Central to their optimism is a view labor markets are improving rapidly and reducing slack in the economy, a precursor to some lift in inflation. Unemployment was 5.1% in August, in the range officials expect to see over the long term. Inflation has been running below 2% for more than three years.

“On balance, labor market indicators show that underutilization of labor resources has diminished since early this year,” the Fed said.

As recently as July, Fed officials appeared to be on track to move at this week’s policy meeting, but a variety of factors gave them pause, including a stronger dollar, stock- and bond-market volatility and signs of a slowdown in China, the world’s second-largest economy.

They are now on watch to make sure these threats don’t turn into a bigger problem for the U.S. economy. A strong dollar, for instance, could put downward pressure on exports and imported inflation, movements at odds with the Fed efforts to spur economic growth and raise currently-low inflation.

They appear to expect—somewhat more tentatively than before—that they will proceed with rate increases once they get evidence these developments won’t fundamentally shift the economic outlook.

The Fed said, as it has before, it would raise rates when it saw “some further improvement” in labor markets and when officials become “reasonably confident” that inflation will rise toward 2% in the medium term.

Before the meeting, investors had come to believe the Fed wouldn’t move. In futures markets before the meeting, traders attached a 27% probability to a rate increase Thursday, but a 64% probability to an increase by December.

Though Fed officials still expect to move rates up this year, their projected path of rates has become shallower in recent months. The median projection for rates at the end of 2015 dropped to 0.375% from 0.625% in June. It also dropped to 1.375% at the end of 2016 from 1.625% projected in June. It fell to 2.625% at the end of 2017 from 2.875% projected in June. In the long-run the Fed projected the fed funds rate will reach 3.5%, down from an earlier estimate of 3.75%.

One official called for a negative interest rate in 2015 and 2016, something that has been tried in several European countries to boost growth and inflation. The Fed doesn’t identify which officials make specific projections.

One reason for the shifting outlook: Officials have become a bit less optimistic about the economy’s long-run growth potential. They projected the economy will grow at a rate between 1.8% and 2.2% in the long-run, down from their June estimate of growth of 2.0% to 2.3% in the long-run. A more lumbering economy has less capacity to bear much higher rates.

The Fed’s economic projections underscored the challenge officials face in reading the current economic backdrop. Fed officials reduced their estimates for the path of the unemployment rate. They see it reaching 5.0% by year end and 4.8% by the end of next year, a lower rate than previous estimates of 5.3% and 5.1% respectively.

Textbooks suggest that as estimates for the jobless rate fall, estimates for inflation should rise. But officials reduced their inflation estimates, thanks in part to downward pressures from lower oil prices and a stronger dollar. They don’t see the inflation rate, as measured by the Commerce Department’s personal consumption expenditure price index, reaching their goal of 2% until 2018, near the end of Janet Yellen’s first term as chairwoman of the central bank.

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, dissented. He wanted to raise the Fed’s target interest rate by a quarter percentage point.

With market expectations for a rate move Thursday so low, raising rates now would have been a gamble for Ms. Yellen, who is known around the central bank for being risk-averse. An unexpected increase might have shaken or confused investors. In holding off, Ms. Yellen is sticking to a course of setting the stage for a move carefully.

Investors now await Ms. Yellen’s press conference, at which she’ll elaborate on the central bank’s views on the outlook for the economy and policy. She is scheduled to deliver a major speech next week at the University of Massachusetts in Amherst.

 Sources: http://www.zerohedge.com/news/2015-09-17/fed-mouthpiece-confirms-fomc-concerns-global-market-turmoil

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What the Federal Reserve will (and should) do today

Almost time to deliver the verdict

The dovish case, and this is what I think will happen, is that ultimately, the Fed won't have the confidence or perhaps the courage to hike because they're terrified that markets will kick and scream.

The World Bank, the IMF and G20 ministers  have warned Fed officials that if they hike there will be consequences. The biggest danger is from emerging markets. Brazil and other parts of Latin America and are particularly strained at the moment. The fear from the World Bank tighter credit and volatility will spark capital outflows. That can easily become a negative feedback loop in those markets and ultimately that will end in tears as weak emerging market growth spills back into the US.

The right call is for the Fed to maintain its wait-and-see stance then strongly telegraph a hike ahead of the December or January meeting. Unfortunately, I don't think the Fed will be that dovish and risk trades are vulnerable if they aren't, including stocks and commodity currencies.

If I'm wrong and the Fed stays dovish, pile into stocks and commodity currencies, especially CAD and AUD.

What if the Fed decides to compromise

There are certainly FOMC members who want to hike right now and some who will argue strongly against it.

In the middle is a large group that wants to hike but have a sense that it's a risk. So what happens? Compromise. They could settle on hike with a message that no more hikes are coming soon or could vote to hold rates today and deliver a hawkish message about October.

Both are mistakes and the market reaction would be largely the same - risk aversion, stock market selling, yen strength, Canadian dollar weakness but to different degrees.

The decision is due at 2 pm ET

For more on the Fed

• FOMC: Time for sense or more excuses?
• Citi has 2 FX plays for trading the FOMC
• JPMorgan says the FOMC decision on Thursday is a coin flip
• RBC "holding out hope" that the Fed will hike this week. Goldmans still looking at December
• Goldman Sachs previews the Federal Reserve decision on Sept 17
• Five Federal Reserve scenarios from Credit Suisse
• Here are the real odds of a Fed hike on Sept 17

Sources: http://news.forexlive.com/!/what-the-fed-will-and-should-do-today-00-20150917

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100 day MA today but not sustained

The 100 day MA at the 1.55185 level was broken yesterday with the high price reaching 1.5527 before moving back lower. Higher wages was the catalyst for a sharp moved higher in the GBPUSD yesterday.  The move higher continued today with the pair extending to the highest level since August 26th.  That pushed the price to 1.5548.  

Although higher, the path traveled has been a rocky one with swings up and down along the way (see the 5 minute chart below). The price managed to extend back up to the London morning session high, but was not able to break that level. That failure as led to a 50 or so pip move lower and in the process took the price back below the 100 day MA (we are currently trading above and below the MA as I type.

FOMC decision day jitters? Sure?  The fed is sitting on the fence and so is the market.  So going back closer to a comfortable place - like the 100 day MA makes sense. Let the Fed decide the next move.

If the Fed hikes, the gains over the last few days should see some erosion.  The downside targets become:

1. 1.5474 (high from Sept 10) 
2. 1.54386 - 50% of the surge higher over the last two days.  

There is a case that the BOE might take a "if the Fed can do it, so can we" attitude.  So keep an eye out for support levels to hold and the 50% of the move higher is a nice place to stall/stop. If it goes below that level some further back filling can be expected with the 1.5396-1.5412 another important line in the sand for the pair. The price going back to the end of August to September 10 price traded below that level.  Since September 10 most of the activity has been above.   Yes it was just below that area on Tuesday and Wednesday before the employment stats, but if that report changes the markets mind, the dip should stay in the RED box.  

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ForexLive European morning wrap: Cautious markets again as the FOMC reckoning looms large

2015-09-17 00:00 Forex news from the European morning session 17 SeptemberNews:                 SNB leaves key interest rates on hold Swiss govt says economic growth will stay below average in 2016 SNB's Jordan says he has no exchange rate targets Swiss Franc is still overvalued says SNB's Jordan ECB says it's premature to assess impact of current events on inflationChina to ramp up infrastructure spending to meet growth target - Livesquawk China's Xi says economy resilient and has huge potential Italy's Visco says monetary policy responded quickly to European debt crisis EU's Moscovici says Greek haircut is not on the table BP official says oil price will drop and stay down for a long time BOJ's Kuroda expects Japan to continue moderate economic recovery  Japan's Aso says business executives must divert corporate profits  FOMC: Time for sense or more excuses?USDJPY option-related supply at 121.00 keeps a lid on rallies so far M&A news may weigh on EURUSD UAE has a "firm commitment" to USD peg         Option expiries 10am NY cut today 17 Sept   Data:    August 2015 UK retail sales 0.2% vs 0.2% exp m/m July 2015 Eurozone construction output +1.0% v s-1.9% prior m/mGreece Q2 unemployment rate 24.6 vs 25.3% exp Nikkei 225 closes up +1.43 % at 18,432.27 It's understandably been a cautious session so far with all eyes firmly fixed on the FOMCMore to follow                                                                   

Source link: 
http://news.forexlive.com/!/forexlive-european-morning-wrap-cautious-markets-again-as-the-fomc-reckoning-looms-large-20150917

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FOMC: Time for sense or more excuses?

2015-09-17 00:00 The FOMC is finally upon us so what will they give us this time?The financial world has been going FOMC crazy here's roundup of stories we've brought you recently;ANZ expect a rate hike from the FOMC ... but beware a government shutdownMitsubishi UFJ says no FOMC hike this timeCiti has 2 FX plays for trading the FOMCJPMorgan says the FOMC decision on Thursday is a coin flipRBC "holding out hope" that the Fed will hike this week. Goldmans still looking at DecemberGoldman Sachs previews the Federal Reserve decision on Sept 17Adam also picked some very good bones from the Fed minutesThe crucial question in the FOMC minutesFed Minutes leaked early: Most Fed officials said hike still not warranted by conditions approaching that pointYellen & Co have previously said they wanted to see more from the economy and have pinpointed, housing, Jobs and wages, so how have they all done since the last meeting?JobsWages/IncomesReal Average weekly earnings y/yHousingInflation is always a big topic but as highlighted by Adam's post above, may be something the Fed are willing to give a little bit of leeway to. Here's the CPI picture right up to yesterdayAnd so to the economy as a wholeThe big questions is whether the US is in a better place than it was in June and JulyOn the face of it there's been improvements but they've been steady and not spectacular. Unemployment continues to fall, wages and incomes are rising, housing is steady, Core CPI is holding up, GDP is steady. In fact, "steady" is probably the correct description for the US economy right now.Is "steady" enough for the Fed to hike rates today?Based on their recent rhetoric, no. The issue I have is that they've pulled a different 'must do better' rabbit out of the hat at the last few meetings. They are reeling out the excuses as to why they don't want to hike. That might be seen two ways;They're really not sure about the economyThey want to wait until the last possible moment before raisingAt some point they will run out of those types of excuses and repeating them will have the market thinking that they'll never hike unless things start to boom, and that's not going to happen. The market has been very patient with the Fed and it's not normally a patient creature. At some point it's going to say WTF? to constant excuses of why they're not hikingI'm on the fence as to whether they hike or hold today. As above they don't seem to be in a rush but then when will be a good time? I already think they've missed the boatWhat we do know is that each meeting that goes by without hiking the more expectant the market gets next time, and the greater the volatility is. It's a pressure valve building and if the Fed are worried about market ripples from their actions then they need to be aware of the potential monster they're creating. It's going to be messy whatever they do but markets will get over it and settle themselves down into the next trend, whatever that may be.For trading it we've got to be careful. I still think the best trade will be after a hike, unless you're already long USD into it, but even then I'd be cautious. There's a lot of people waiting for this potentially last blast in the dollar and the resulting exit could be very messy. I'm still long from my BOJ dip and have got the nice buffer I was hoping for. I've locked my profit in at 119.90 and will move that right up to 120.50 (or thereabouts) into the meeting. I'm also going to think about taking half off just so I've got some profit bankedFor trading over the meeting, that's going to depend on the details and what's said at the presser but lets look at the possible outcomes;No hike and a dovish tone will sink the dollar sharply but we know it likes to come roaring backNo hike but a hawkish tone and longs can ride the train a while longerHike and dovish on future hikes and it might be time to ride the kneejerk and then pull the parachute chordHike and hawkish on another quick hike and a jump might last a few sessionsEither way, both sides of the trade are going to be watching very carefully. Best of luck to you all and stay safeAll eyes on the old girl at the Fed

Source link: 
http://news.forexlive.com/!/forexlive-fomc-preview-time-for-sense-or-more-excuses-20150917

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China's Xi says economy resilient and has huge potential

2015-09-17 00:00 Chinese president out on state radio bigging it up for the masses          plenty of room for manoeuvreChinese economy has ability to maintain long-term medium to high growth rateWe'll see about that one eh?Earlier the Chinese fin ministry announced that they will issue 3month bonds on weekly basis starting from Q4 and says bond issuance plan is to satisfy requirement for Yuan's inclusion in SDR basket 

Source link: 
http://news.forexlive.com/!/chinas-xi-says-economy-resilient-and-has-huge-potential-20150917

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GBPUSD rally runs out of steam

I mentioned earlier that the pound had a lot of congestion between 1.5460 and 1.5527 and we've topped out at 1.5529

GBPUSD H1 chart

At the time we were trading at 1.5422 and the trade was taking the breaks of the upper levels. The top one has been one level too far and now we're seeing some profit taking. I would like it to sit above 1.55 for the remainder of the day, to see support build but it looks like the broken 50.0 fib is doing the job well enough. Should we come back down further then the 1.5475/60 area is the strong level to watch

I warned against jumping in at the top at the time and that looks like a crap call with hindsight. The trouble is we can't trade hindsight and so we have to trade what's in front of us at the time. When I did the post we had already run nearly 100 pips up and people were willing to short it there. It's why we try to teach traders to wait for the levels and confirmation that a move is going to continue or peter out.
Sources: http://technical-analysis.forexlive.com/!/that-looks-to-be-it-for-the-pound-run-today-and-guess-where-we-topped-out-20150916

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“Be neither a conformist or a rebel, for they are really the same thing. Find your own path, and stay on it.” -Paul Vixie

When’s the last time you jumped of a cliff because everybody else was doing it?

Okay, bad example.

Have you ever joined an endless line of people in the super market checkout line ready to pay, and waited 20 minutes before realizing there was another open register right beside you?

No?

How about this one…You patiently wait outside with a large crowd of people to get into the door at a movie or bar when someone dashes right in with no second thought.

The door was open the entire time!

Nobody ever approached the door to see if it was unlocked! You just assumed it was locked. You simply followed the crowd and didn’t take the initiative to check for yourself because of feeling embarrassed if you were wrong.

Your reactions, or lack of, illustrate conformity. You care too much about your “image” and what others think of you. Stepping out of your comfort zone is too much for you to handle. You think that being like the majority is safe and out of harm’s way.

Take a risk? No way, it scares the heebie-jeebies out of you.
You’re afraid to take even a small, sensible risk for fear of the negative consequences. You lack initiative.

Does this sound like you?

If so, don’t worry. The previous traits describe how a large majority of traders respond to the turbulent ups and downs of the forex market.

So why do traders conform?

For one, your everyday-conformists always concern themselves a great deal with self-appearance. They are definitely interested in looking good. Wanting to make the right impression is something that was instilled at childhood.

Conformity is so encompassing that these people always worry about displaying the “right” impression even when it’s not needed. To save embarrassment, they might hold onto a losing trade. And they may not want to try anything original or even pioneering, given the possibility of coming off as a fool when explaining things to friends.

But what does it really matter what anyone else thinks?

If you have problems with this, look deep inside yourself for direction on what you really want to do. Never let anyone else’s thoughts or feelings decide your path.

Two, traders also conform because they fear taking risks. Behind this fear usually lies the shame of losing and being a failure. And these conformists have to be right.

How do you help yourself?

Realize that failure IS to be expected.

It happens to everyone.

Many successful business people will tell you they had more failures than successes, but that it was the lessons that they learned from their failures that played a larger role in eventually attaining success.

Winning forex traders learn from failure, don’t care if they look bad and aren’t afraid to take risks.

Now, there’s a difference between moving outside of the lines gradually and totally throwing caution to the wind by gambling your money away like a mad man (or woman or cow).

A winning trader takes risks but protects herself with proper risk management. In time you’ll learn how far outside the lines you can travel comfortably and when it’s time to come back. You’ll be trading like a winner… in your own way and on your own path.

Read more: http://www.babypips.com/blogs/pipsychology/forex-risk-20150914.html#ixzz3lumeAo6y

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Gains extend to 180 pips today

Gains extend to 180 pips today

Carney and the gang are continue to testify in Parliament and the overall tone is upbeat on the economy inflation despite the recent market turbulence.

The pound is soaring and has cut through the 50% retracement of the August decline and now through the 100-day moving average. The next level to watch is 1.5569, which is the 61.8% retracement of the Aug drop.

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UK labour data may be enough to see more MPC members voting for hikes at next meeting

2015-09-16 00:00 UK labour data will keep the domestic economy on the right track and the BOE hawks happyToday's data is great news for the UK. The jobs market remains strong and the wage data is as good a sign of that as anyLike everyone else the UK faces export weakness in the current global market and that has been the main driver for weaker sector data from the UK. When we were recovering back in 2013 both the domestic an international parts of the economy were recovering together. The domestic art was always the stronger but it all went into the pot. Now we're finding it tough to sell abroad and we're seeing the effect of that in the dataThis data today will go along way to underpinning the economy on the domestic front. In real terms that's the only part the BOE has any control over. If the UK remains strong domestically then the BOE will be able to hike rates. Because of these two parts to our economy it means that even further falls in the main data numbers won't necessarily add weight to the no-cut arguments. The distinction will have to be made whether any weakness is caused by domestic or international influencesIt means we have to delve into the data a little deeper now to find the clues. The wider market may trade the normal 'Bad data = lower rate hike chances'  but the reality may be quite differentThe data today reduces my worries that the UK will see a big slowdown and that we're probably just going to see a consolidation phase in the data and economyFor the BOE, the data today should embolden the MPC to keep on their projected path for rates and it may even be enough to see a few more members jumping across to the hike side of the road at the next MPC meetingFor the pound. It's too early to tell but I wouldn't be surprised if we start to see more support coming in now. If we look like basing then any hawkish FOMC news that sinks the pound will be a good dip buying opportunityUK wages on the up

Source link: 
http://news.forexlive.com/!/uk-labour-data-will-keep-the-domestic-economy-on-the-right-track-20150916

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