Market Sentiment Remains Soft, BoE Takes Center Stage

Market Participants Continue to Trade Cautiously

The dollar traded mixed against the other G10 currencies on Wednesday and during the Asian morning Thursday. It underperformed versus NOK, SEK, JPY, and CHF in that order, while it recorded some gains against EUR, CAD, NZD, GBP, and AUD.

AUD/JPY — Technical Outlook

Looking at the technical picture of AUD/JPY on our 4-hour chart, it seems that the pair is coiling up, as it continues to trade between two of its short-term tentative lines, an upside one taken from the low of June 12 thand a downside one drawn from the high of June 8 th. All this increases the possibility to see a strong directional move in either direction, once one of the lines get broken. Until then, we will take a neutral stance and wait for that confirmation break.

Is indeed the BoE Thinking about Negative Rates?

As for today, the main event may be the BoE monetary policy decision. At their last meeting, policymakers of this Bank kept monetary policy unchanged. Via a unanimous vote, they kept interest rates on hold, while with regards to their QE program the vote was 7–2 in favor of keeping the amount of purchases unchanged. The two dissenters, Saunders and Haskel, preferred to increase the target for the stock of asset purchases by an additional GBP 100bn. With officials noting that the current QE is set to reach its target at the beginning of July, we see it nearly certain that they will expand their purchases at this gathering, perhaps by another GBP 100bn as the dissenters suggested at the prior gathering.

GBP/NZD — Technical Outlook

GBP/NZD continues to trade below a short-term downside resistance line taken from the high of May 15 th. However, from the beginning of June, the pair is struggling to go for a lower low, as it keeps getting held near the 1.9368 area. For now, we will take a somewhat bearish approach, but we will get more comfortable with lower levels if we see a break below the previously-mentioned 1.9368 area.

As for the Rest of Today’s Events

Apart from the BoE, we have two more central banks deciding on monetary policy today: The SNB and the Norges Bank.

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