The impulse of the market for 14/07/2016, what are we going to trade

14.07.2016 / 12:14

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Today a leading place take again the actions of the central banks, which are the main factors behind the current risk appetite.

the expectations are that Bank of England will reduce the interest rate today, and that Bank of Japan might be planning a huge stimulus package, which caused the futures of the US and EU indices to rise.

The expectations are that BoJ will introduce a stimulus package of 20 trillion JPY or a total of 4% of GDP, which would cause the value of the JPY to fall sharply, causing an improvement in the trade balance account. Therefore, we should trade along with the market trend, which is now in favor of weaker JPY, thus it is a good opportunity to open long positions in the currency pairs EUR/JPY, USD/JPY, AUD/JPY.

The Bank of England is expected to reduce the interest rate today at 14:00 o'clock, which would be seen as a positive factor that would affect indices, especially the ones that are traded long. That would keep the momentum going for a bit longer. However, the new high level is expected around 14:00 o'clock, thus it is too risky to open long positions.

All GBP cross currency pairs are going to move with the same momentum of JPY. The biggest movements are expected there due to the upcoming news from BoE. If there is a reduction of the interest rates in the UK, we should see a fall in the value of GBP against all other cross currencies. However, there is possibility that the pound might react the opposite way to a change in the interest rates, thus, today's GBP trading is not advisable as it would be risky, especially during the news announcement.

The increase in risk appetite would cause the price of Gold to fall, that is why we open short positions on Gold as it is expected to drop to price levels around 1313 USD.

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The impulse of the market for 14/07/2016, what are we going to trade

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