Market activity remained quite low last week. The US dollar tried to develop an upward trend against most of its competitors, but to talk about any outstanding successes is not necessary. British pound in a pair with it was trading in different directions, where the growth shortly, swiched to decline. Support in the beginning of the week the pound has received from the inflation data from the UK, exceeded predicted values, but the probability of the country's exit from the European Union continues to pressure on it.
The Bank of England, as expected, kept interest rate and amount of asset purchases unchanged, and published protocol of the last meeting of the Committee on monetary policy showed the absence of votes in favor of a rate hike. Thus the prospects for the beginning of the tightening by the Bank of England of monetary policy remains very vague, which is also have a negative effect on the dynamics of the British pound. Due to some recovery he is in general came out of the oversold condition, that poses a threat to the resumption of the downward trend, but in the short term, expect its large scale fall is hardly worth it.
Despite the risks of a possible introduction by the Bank of Japan of additional stimulus measures, the recovery of the US dollar against the Japanese yen did not differ with stability and duration. By the end of the week the pair once again dropped, and the new one has begun a small gap down, which was triggered by the drop of oil prices and the fall of of stock indexes. The inability of the dollar to test and overcome the 110-th figurewith the following fall to the lows, increases the risk of breakout. However, at the current levels and lower, is possible the tightening of relevent rhetoric from Japanese officials, that will provoke bursts of volatility and rebound of the dollar/yen up, IAFT traders we recommend be extremely cautious.BlogLinks
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