Short Sterling is Under Pressure Ig

8/2/2019 Short Sterling is Under Pressure Ig

1/5

Authorised and regulatedby the FSADisclaimer

UPDATE

FundamentalTechnical

in association with

22nd March 2012

Short Sterling is under pressure


2/5

UPDATE

Fundamental

Technical

in association with

Disclaimer

ay J une Jul y August Sept em ber N ov em ber 2012 February Marc h April May Ju

10000

15000

20000

25000

30000

x10

98.25

98.30

98.35

98.40

98.45

98.50

98.55

98.60

98.65

98.70

98.75

98.80

98.85

98.90

98.95

99.00

99.0599.10

99.15

99.20

99.25

99.30

99.35

99.40

99.45

99.50

99.55

99.60

99.65

High 99.10High 99.15

Short Sterling LIFFE Jun 13

1 7

November

14 21 28 5 12

December

19 27 2

2012

9 16 2 3 30 6

February

13 20 27 5

March

12 19 26 2

April

5000

10000

x10

98.45

98.50

98.55

98.60

98.65

98.70

98.75

98.80

98.85

98.90

98.95

99.00

99.05

99.10

99.15

99.20Short Sterling LIFFE Jun 13


WEEKLY CHART

The market has failed to makeprogress through the 99.00 level on

successive occasions since that levelwas first achieved last summer.

The band of 99.10-15 is now majorresistance.

Look closer.

DAILY CHART

A H&S top has completed.The minimum move on thedownside? About 98.60.


3/5

UPDATE

Fundamental

Technical

in association with

FUNDAMENTALS:

The UK economy has been showing steady signs of improvement this year, asrecent PMI surveys, especially the Service sector variety, have been stronger than

expected. Other data too has surprised with earlier retail sales reports and recenthouse price surveys picking up.

But todays release of retail sales was weaker than expected and once again the

doom-sayers are talking the economy down, but what does the market say?

For such a key data release to come in so weak relative to market consensus, themarket has shrugged it off. The front contracts have barely moved and further

down the yield curve, December 2013 tried to rally but failed.

This tells us that the market is focused on something else, what is it?

It isnt equity markets because they have been weaker over recent days and today

the FTSE and S&P are under pressure.

We judge traders see todays number in a broader context and when set against the

recent strong PMI Service sector surveys both here and in the US a recovery, notrecession is clearly the expectation.

As with any turning point in the economic cycle, data releases are uneven. Whethergoing into recession or starting a recovery, data occasionally throws out acontradictory signal and we judge that is how todays UK retail sales report is seen.



4/5

UPDATE

Fundamental

Technical

in association with

FUNDAMENTALS: CONTINUEDIn the US the recovery is clearly picking up speed. Much like in the UK, the ISM non-manufacturing surveys are strengthening and a recent retail sales report was stronger than

forecast. But unlike in the UK , the US Labour market has turned too.

The non-farm payroll report has been picking up for several months and the weekly initialjobless claims report today dropped below 350k for the first time in four years.

Why you might ask is he going on about the US when writing about Short Sterling? Theanswer is simple: the US economy still dwarfs any of its nearest rivals including China andwhat happens there has an impact globally.

For example; last months Japanese trade report showed a deficit of some 1,475.0B Yen

which this month had turned into a 32.9B Yen surplus on increased US demand. So mypoint is traders see a visible US recovery taking hold and expect that to percolatethrough into the UK economy, which is already in the early stages of its own recovery.

Yesterdays budget attempted to do what it could for business and wealth creators within the

constraints of the austerity drive. So while we continue to see little opportunity for either theBears or Bulls in the front contracts of Short Sterling, further down the yield curve we

anticipate more movement with the Bears increasingly taking control.

For sure, it is way to soon to expect any upward movement in monetary policy, but marketsdont follow Central Bankers they try to anticipate their next move. That will at some pointbe a tightening. The place to anticipate that is further down the yield curve so watch forthe shape of the Short Sterling futures strip begin to change over the coming monthsas the economy enjoys the boost from the Queens Diamond jubilee and the Olympic

games, both due this year.



5/5

UPDATE

Fundamental

Technical

in association with

SEVEN DAYS AHEADAuthorised and Regulated by the FSA124 REGENTS PARK ROAD LONDON NW18XLTEL +44 (0) 7849 922573 E-MAIL [email protected] ,[email protected] SITE SEVENDAYSAHEAD.COM

The material and information set out in this research is not intended to be a quote of an offer

to buy or sell any financial products. Any expression of opinion is based on sources believedto be reasonably reliable but is not guaranteed as to accuracy or completeness.

The material and information herein is general and for informational purposes only. Although

Seven Days Ahead endeavours to provide useful information they make no guarantee as to

the accuracy or reliability of the research.

The derivative market comprises volatility and considerable risks. To the maximum extent

permitted by law no responsibility or liability can be accepted by Seven Days Ahead, any

company or employee within its group for any action taken as a result of the information

contained in this presentation. You are requested not to rely on any representation in this

research and to seek specific advice from your accountant, legal adviser or financial services

adviser when dealing with specific circumstances.

Seven Days Ahead is regulated by the UK Financial Services Authority.
mailto:[email protected]://www.sevendaysahead.com/http://www.sevendaysahead.com/mailto:[email protected]

Short Sterling is Under Pressure Ig

Documents

Transcript of Short Sterling is Under Pressure Ig