EU Consumer Confidence rises to -23.5 in Mar from -23.6 in Feb
Mar 20, 2013
Forex Flash: BoE fallout and the ensuing ramifications – UBS
Today Chancellor George Osborne announced changes to the Bank of England remit, ostensibly to formally recognize the 'use of unconventional tools'. The inflation target was kept unchanged at 2%, however the timing of the BoE open letter on CPI would be changed. Crucially, and directly citing the 'example of the Federal Reserve', the Bank of England now 'may wish to issue explicit forward guidance' and adopt 'intermediate thresholds' – i.e. numerical targets for inflation and growth, such as CPI and the unemployment rate. According to Research Analyst Geoffrey Yu at UBS, “The BoE is expected to 'assess' these changes and report the response in its August inflation report.”
According to TD Securities analysts, the USD/CAD short-term price patterns are potentially USD-bullish, but the USD still has some work to do: “After the rebound from retracement support at 1.0186, the market may be carving out a small Head & Shoulders continuation pattern (1.0282 neckline currently). The upside implications of the formation suggests that new cycle highs might be reachable in the next 1-2 weeks”, wrote analysts Shaun Osborne and Greg Moore, pointing to a flat short-term trend momentum favoring more range trading for the moment. “We still prefer to try and buy dips but a push through resistance in the upper 1.02 zone near term should be USD-positive”, they added, pointing to a key break out point at 1.0278. “Daily and weekly trend momentum signals are still aligned bullishly for the USD, providing some good cover for our broadly bullish bias”, they continued, adding key support at 1.0175/80.