The expectations for policy changes from the major central banks is ruling the FX markets”, says Josh Mahony, Financial Analyst at IG, as he joins the Tip TV Finance Show to discuss the monetary divergence at play, the expected action ahead from major global central banks, and EUR/USD, GBP/USD, USD/JPY, and the Dollar Index.
Key Quotes
“Monetary divergence play in FX markets. BOJ is likely to ease over long term. If the data holds up well in run up to August meet, there is little reason to ease then. Dollar-yen is now higher prior to referendum, this questions the need to do more by BOJ.”
“There is 10% chance of ECB easing today.”
“EUR/USD – Double bottom breakout likely on Draghi’s dovish talk.”
“Cable – Tweezer formation.. no reason to enter longs over medium to long-term. Ultimately people are going to look at it as cheap since it is at 30-yr lows. We are going to see another leg lower on BOE, whenever she moves rates.”
“USD/JPY – higher highs, comments from Kuroda that they might not act. The pair could be sold heading into next week’s BOJ meeting.”
“Dollar index – Fed likely to move this year/next year. Index could move higher.”