Fed's patience snapped, Banks of Japan and England

20 cze 2019

The Banks of Japan and England are announcing the results today.

But, let's start by summarizing yesterday’s FOMC meeting. The Fed did not violate the established balance in the market and left the interest rate unchanged. As for the comments, then, as we expected, they turned out to be “dovish”. In particular, the phrase “to be patient”, which was the main motive of the Fed's statements lately, has disappeared. What does this mean? That the Fed is ready to cut the rate: 8 out of 17 FOMC members expect a rate cut by the end of 2019.

The Bank of Japan has already announced its decision on monetary policy parameters, as we expected the parameters are left unchanged.

Today we are expecting another decision from BoE. Well, the situation in the UK is tough enough, therefore the rate will be unchanged, on our point of view. We are not expecting the pound growth. So, any surge of volatility has to used to open counter positions ( in case of absence of clear fundamental contraindications ). What is that mean? If the pound jacks up, we will sell it in the area of daily hights. And if, on the contrary, it begins to sell, then we will look for opportunities to buy it. Once again, we do not expect the formation of directional movement in pound pairs following the meeting of the Bank of England.

Meanwhile, in the UK, Mr. Johnson won the second round of the contest with the backing of 126 out of 313. And yesterday, Boris Johnson won a third successive ballot, with 143 votes. The remaining candidates are Michael Gove, Sajid Javid, and Jeremy Hunt.

Our trading preferences for today: we will look for points for selling the US dollar primarily against the Japanese yen, as well as the euro, selling oil and the Russian ruble, as well as buying gold. As for the pound, we described the plan for working with it above.