James Hughes, Chief Market Analyst at eToro joined Nick Batsford and Zak Mir today to discuss the latest trends including the Bank of England and sterling strength.
Bank of England to raise rates before the Federal Reserve?
Hughes began by repeating his call that the Bank of England could raise rates before the Federal Reserve. He notes that Yellen is held back by sluggish GDP growth, whereas in the UK Carney has a nice run of solid data to support any decision. Looking to this Friday’s Nonfarm Payrolls numbers, he feels that a monster print above 300k would be needed for a rate rise in 2015 to be considered.
Rolls Royce (LONDON:RR) driving in neutral
Looking to broker recommendations, Mir cited APR Energy PLC (LONDON:APREN) as a sell by Citigroup (NYSE:C), Shore (LONDON:SGRS) neutral by Credit Suisse (SIX:CSGN), overweight by JP Morgan and buy from Jefferies and Kepler, and finally Rolls Royce as neutral by Credit Suisse. Shifting to sentiment, Hughes commented that eToro clients are massively bullish on US indices, and also massive long positions are building up in oil.
GBP/USD to break higher on Bank of England
Taking a view on the morning technicals, Mir started with GBP/USD, noting that it is waiting for news tomorrow with the Bank of England and that it is a bit bid at present, and some traders may be front running the central bank. Hughes added that he can see an upside break due to any hawkish developments, set againt a dovish US rate view.
EUR/USD to break below 1.08?
Moving to EUR/USD, Mir feels that 1.08 is the key level and if it breaks then you can see some big negative reactions. Hughes added that the big news here would be if EUR/USD actually did anything based on fundamental news. Both suspect that after a big stop clearance with a push to 1.11, and move lower, there could be movement ahead.
AUD/USD rallies could get sold
AUD/USD, they note, is sat at the bottom of a long term downtrend channel, and is looking to try and bounce to around 0.74-7450 where we could start to see sellers come back in again. Hughes feels that all commodity currencies are a strong play right now, with also Kiwi and CAD offering opportunities to traders.
RBS (LONDON:RBS) over gloomy, FTSE 100 see’s upside?
Shifting to RBS, the FTSE 100 and Copper, Mir commented that despite the contrevercy over the recent sale, the stock remains stable and any bearishness in the market may be over done. Looking at the FTSE 100 he added that he originally was looking for a range between 6500-6700 but the market is probably a little bit stronger now. Mir felt that Greece looked to be a bigger factor, but has almost been ignored and as such look towards 6750-6800. Finishing with Copper, he notes that it is still looking grizzly. He notes that rallies remain very weak, and old support is coming in as resistance. He sees no reason for investors to rush in.