It was turmoil today on the markets as the Bank of England (BoE) shook up the pound sharply on the back of weaker global growth forecasts. Mark Carney was quick to point the finger at emerging market economies, which have for the most part struggled with the fall in commodity prices. This in turn has driven down the prospect of a boost in inflation, which in turn would have led to a strong rally in the pound over the prospect of an interest rate rise. This is not really a shocker as global growth has so far been quite skewed and for some time, and weakness has been apparent.
The weakness led to a sharp selloff in the pound, and the market is still looking for a bottom against the GBPUSD. Support at 1.5616 is likely to be the prime candidate for the market at present for traders to look to profit take, certainly any further falls here will target support at 1.5029. There is also a bearish trend line in play here, but it looks to me like it is starting to form a descending wedge, but it looks very much like it will take some time for it to consolidate.
Silver markets have seen a fair degree of bearish momentum as of late, as the price has fallen from 16.06 to 14.96 - a large drop for a metal which has seen strong bullish momentum in the previous month. As of right now we have seen further falls and this is despite a slight bit of weakness in the US dollar after a worse than expected unemployment claims in the US, as it came in at 276K (262K exp). The movements lower here are quite interesting, as strong support levels at 14.797 and 14.356 are likely targets for traders at this stage. I would also be surprised to see a break through at 14.356 as we have yet to see anything tangible in the way of a date for a US rate rise and the global economy (as mentioned above) is still quite weak.
The NZDUSD is also looking like an interesting candidate for bearish movements, as across the Tasman sea there is talk of further decreases in growth forecasts by the Australian treasury all of which will have a big impact in that corner of the world. Despite the fact that the NZ economy is running at a fiscal surplus, there is a real risk it could slide backwards quite easily in the current economic environment and the market is well aware of this.
Market movements for the NZDUSD are looking ambitious at present for the bears after two strong days of selling. Today's slight pullback was met with stiff resistance as it failed to hold any ground above 0.6620. If the market closes below this level it could very well be a signal that we will see further selling in the former high flying kiwi currency.
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