(NEWS) Turkey - Market reaction

As a follow up on unfortunate events in Turkey over the last weekend, the reaction of the market was rather muted but rating agencies have started to express their worries. For example Moody's is reviewing country's rating with possibility of a cut or even moving it to Junk territory.

Overall, it is not just what has happened but also the weakening efforts to reform the economy with upcoming challenges at political, economical as well as security level.

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading       teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed   as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from       action where despite this disclaimer someone would consider this  material  as an investment advice. 

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Trade Idea - TESLA short

There were several rather negative stories around Tesla recently and despite I´m a big fan of the company and its founder Elon Musk, currently the Technical picture also looks to the downside. The stock formed lower high (H2) on the weekly charts last summer followed by a lower low this February. From this low it recovered pretty rapidly after the release of the Model 3 however the momentum was enough to form another lower high (H3) in April from where it started to fall again. So the big picture says the downtrend was confirmed and last week a shooting star doji was completed which is a very powerful pattern especially if we check where it happened to appear - at the top of the descending trend channel on the daily chart. Let`s catch the wave!

The daily chart shows very similar picture as the weekly. The lower highs were followed by lower lows. Last week was full of signals the minor uptrend from the beginning of July is ready to make a U-turn however we waited until the weekly pattern is finished. Here is the overview:

Tuesday – Doji Shooting Star

Wednesday – Engulfing pattern with a low 220.29

Friday – retested low of the engulfing pattern and event the shares couldn`t close below the Wednesday min., it created a lower low at 219.64

Our bearish view  could be strengthened strengthened by the fact that while the shares closed lower the last three days, the US stockmarket closed higher making all time highs during the day. A potential overall correction of the overbought stocks may help to push the negative monentum further on Tesla. Given these facts our call is to short Tesla on Monday with the following parameters:

Entry:

Sell Stop Limit – stop 219.60 limit 219.45

Protective stop – exactly at the high of the last week 227.50, the market shouldn`t go so high again but if then be prepared to reentering the position. We will post an update if conditions allow repeated entry.

Target 1 -  at $190 just above the last low which will be likely tested if we are right with this call

Target 2 - at $170 which is $6 above the lower channel line.

The company will release earnings beginnignof August. If the figures would be worse than expected, the shares may retest also the lows from february around $142.

Few words about risk management:

Trading stocks means you may face huge gap risk (20-30%). Therefore you need to adjust your position size to this kind of reality: no leverage, the notional amount of the  trade shouldn`t be higher than 20% of your equity. Even the situation may look like a great opportunity, don`t be gready!

Watch your risk and be consistent!

Mr. TechMan

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading       teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed   as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from       action where despite this disclaimer someone would consider this  material  as an investment advice. 

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Stocks - Q2 Earnings Note

Q2 Earnings

Last Week

BlackRock – worse than expected but kept capital inflows positive despite political/macro uncertainty, extremely low yields and market volatility. All of that made clients to deposit money with banks/cash instruments and fixed income.

Brexit vote impact – institutional investors rebalancing/redesigning portfolios while retail is pulling money out. Worried about yields going lower but good Q2 earnings can justify highs of stock market. Prefers Deutsche Borse/LSE headquarters to be based in continental Europe over UK.

JPMorgan Chase Inc – reported better than expected across all apart from AUM decline, higher provisions and non-performing loans. Consumer, corporate, commercial and investment banking better (both fixed income/equity trading higher). Overall strong in retail, credit cards, loans (especially mortgages & commercial real estate) what is a good sign for US economy. Looking at increasing buyback program.

Brexit - negative impact on UK economy now and in the future, also effecting US & global economy but to small extent. Too early to speculate about reshuffling of UK’s operations and moving them to continental Europe.

Citigroup Inc – reported EPS higher/revenue lower than expected, other mixed. Able to generate earnings despite volatile/uncertain global environment, continues in focusing on core (almost all profits from core), reducing non-core, improving efficiency, return on assets. Globalization and its effects not fading away, will stay despite isolationist policies.

Brexit - was positioned for Brexit vote volatility, developing story but no financial crisis resulting from it. Sees lower rates longer.

Wells Fargo & Co – results mixed to worse than expected, Tier 1 common equity ratio under Basel III. Continues in improving efficiency, non-performing assets lower, and provisions higher, solid growth in loans, deposits and customers. Credit loan losses heavily due to energy and gas book.

Brexit – lower impact as more US focussed while US improving but impacting rates decisions.

Upcoming Week

Monday

Bank of America - estimated EPS 0.33, -24.9% Y/Y; Revenue 20 371 mln

The similar questions as for Citigroup, JPMorgan Chase and Wells Fargo would need BofA answer.

Charles Schwab Corp – estimated EPS 0.30, +24.8% Y/Y; Revenue 1 798 mln

Increased trading activity from Brexit, asset reallocation due to low yields and higher market volatility may boost its numbers. The retail and institutional figures will be reviewed by investors closely.

IBM – estimated EPS 2.89, -24.8% Y/Y; Revenue 20 084 mln

Yahoo! Inc – estimated EPS 0.09, -41.9% Y/Y; Revenue 840 mln

Tuesday

Philip Morris International Inc – estimated EPS 1.19, -1.8% Y/Y; Revenue 6 773 mln

Goldman Sachs Group Inc – estimated EPS 3.08, -31.6% Y/Y; Revenue 7 547 mln

Q2 results should are expected to be boosted by higher trading activity over Brexit period and as the legal costs from last year are off the table.

Interactive Brokers Group Inc – estimated EPS 0.35, -20.9% Y/Y; Revenue 377 mln

Similar comment as for Charles Schwab Corp…

TD Ameritrade Holding Corp – estimated EPS 0.38, +4.4% Y/Y; Revenue 829 mln

Similar comment as for Charles Schwab Corp…

Johnson & Johnson – estimated EPS 1.68, -1.8% Y/Y; Revenue 17 982 mln

Expecting better sales of drugs offsetting declines in other activities. Since the company generates substantial sales internationally, the rising USD may have negative effect.

Novartis AG (CH) – estimated EPS 1.19, -6.2% Y/Y; Revenue 12 160 mln

UnitedHealth Group – estimated EPS 1.89, +15% Y/Y; Revenue 45 038 mln

Lockheed Martin Corp – estimated EPS 2.93, -0.5% Y/Y; Revenue 12 582 mln

Microsoft Inc – estimated EPS 0.58, -6.1% Y/Y; Revenue 22 125 mln

Rising cloud business versus decline in PC sales…which one will win?

Wednesday

American Express Co – estimated EPS 1.96, +37.4% Y/Y; Revenue 8 481 mln

Morgan Stanley – estimated EPS 0.60, -23.8% Y/Y; Revenue 8 344 mln

Similar questions as for JPMorgan Chase, Goldman Sachs and other brokers…

Abbott Laboratories – estimated EPS 0.53, +2.7% Y/Y; Revenue 5 248 mln

eBay Inc – estimated EPS 0.42, -45.0% Y/Y; Revenue 2 172 mln

Intel Corp – estimated EPS 0.53, -8.7% Y/Y; Revenue 13 554 mln

QUALCOMM Inc – estimated EPS 0.97, -1.6% Y/Y; Revenue 5 588 mln

SAP SE (GE) – estimated EPS 0.87, +8.3% Y/Y; Revenue 5 223 mln

Thursday

Daimler AG (GE) – estimated EPS 2.01, -5.3% Y/Y; Revenue 38 910 mln

General Motors – estimated EPS 1.49, +15.4% Y/Y; Revenue 38 550 mln

Why are shares declining when company’s profits are on the rise? Market may be feeling that the cyclicals are losing steams what is also underlined by GM losing market share in its home market.

Johnson Controls Inc – estimated EPS 1.03, +13.3% Y/Y; Revenue 9 618 mln

Biogen Inc – estimated EPS 4.70, +11.3% Y/Y; Revenue 2 795 mln

At attractive levels with ROIC at 34% and revenue growing at 11% (last quarter) vs 17% past 5 years. The company has a strong business and is looking at positive momentum in its Alzheimer pipeline despite recent negative drug updates. Of note are also upcoming trials of Alzheimer drugs in H2, putting the company high risk/reward pool. From technical perspective, the stocks corrected 50% from peak in early 2015.

Roche Holding AG (CH) – estimated EPS 7.41, ---% Y/Y; Revenue 12 307 mln

Southwest Airlines Co – estimated EPS 1.21, +17.0% Y/Y; Revenue 5 403 mln

Union Pacific Corp – estimated EPS 1.16, -10.5% Y/Y; Revenue 4 789 mln

Starbucks Corp – estimated EPS 0.49, +16.0% Y/Y; Revenue 5 341 mln

Swatch Group AG (CH) – estimated EPS 7.58, -23.9% Y/Y; Revenue 3 906 mln

Unilever PLC (GB) – estimated EPS 0.92, +1.4% Y/Y; Revenue 26 594 mln

Schlumberger Ltd – estimated EPS 0.21,  -75.8% Y/Y; Revenue 7 136 mln

E*TRADE Financial Corp – estimated EPS 0.38, 36.7% Y/Y; Revenue 470 mln

Visa Inc – estimated EPS 0.67, -9.9% Y/Y; Revenue 3 639 mln

Not only profits will be reviewed but after Brexit situation in merger with its European activites will be too.

AT&T Inc – estimated EPS 0.72, +3.8% Y/Y; Revenue 40 626 mln

Friday

Whirlpool Corp – estimated EPS 3.37, +24.7% Y/Y; Revenue 5 132 mln

Valeant Corp – estimated EPS 1.57, -38.7% Y/Y; Revenue 2 478 mln

FDA in its preliminary review said that suicide risks from its psoriasis drug are hard to assess due to limited data.

General Electric Co – estimated EPS 0.46, +63.2% Y/Y; Revenue 31 354 mln

Honeywell International Inc – estimated EPS 1.64, +8.7% Y/Y; Revenue 10 128 mln

Syngenta AG (CH) – estimated EPS 13.83, -6.0% Y/Y; Revenue 7 133 mln

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmail.com

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Weekly Tech Overview - AUDJPY - Week 29

Hi all,
AUDJPY weekly - we have to take AUDUSD ( please check our previous Weekly Tech Overview here ) and USDJPY into consideration. In both cases bulls have got a chance and space for rally. If true, that could help to test top of the channel on weekly AUDJPY chart and that could be the first chance to go short ( failure to close above ). Any kind of action from BOJ may help for further rally twds 88 ( that would be +10% from current level ) and it could create another chance for sellers.

Weekly close above 88 will cancel bearish scenario and will open the door for a test of 95/96 levels and then 100/102/105 ( its not unlikely with strong Central Banks manipulation in place ).

Summary: patient is needed, short could be in play only with failure at the top of the channel ( break and close above could be short term buy signal ) or on a rally towards 88. Good Luck.

Mr Price Action

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice.

All rights reserved ©2016 www.landoftrading.com Contact: landoftradingATgmail.com

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Weekly Macro Overview - Week 29

Previous Week Summary

The whole week we saw risk on flows on the back of few positive news as Theresa May becoming UK’s PM, BoE and BoJ getting ready for more stimulus, Fed officials expressing patience about rate hikes, pretty good start of earnings season…all of that pushing stocks strongly higher. For stocks to keep the momentum we would need to have decent earnings coming in. Meanwhile, bond yields moved higher and USD got some strength on the back of better US macro data that renewed Fed rate high thinking.

Monday – BoE looking at curbing the cash withdrawals from real-estate funds, UK to strengthen ties with North America invest in infrastructure. Spain & Portugal may not eventually face the fines in EU budget procedure.

Tuesday – Japan to end deflation, stimulus by month end, no seize/sources of financing. BoE – will do all what is needed to secure financial stability after Brexit. Spain & Portugal under official deficit procedure. EU pushing on UK to trigger Article 50. Philippines-China court ruling on South China Sea – no historic title to it, would likely negotiate before G20 meeting in Philippines. Bullard (Fed) – one rate hike in a foreseeable future possible, economy stuck with low growth, inflation and unemployment, sees 2% inflation and unemployment rate at 4.7% in 2.5 years, monetary policy can’t change productivity, housing market to improve. US JOLTS job openings at 5.5 mln in June vs 5.85 prior, slight correction of preferred measure of Fed’s Yellen. UK Parliament may debate as early as on Sep 5 the possibility of holding a 2^nd Brexit referendum because of 4.1 mln petition.

Wednesday – EZ May Industrial production worse, previous revised higher. Japan should expand fiscal/monetary stimulus, should buy bonds not go for negative rates. Scotland reiterated its intentions to stay in EU. US Mortgage applications lower than expected, BoC – no change in rates, Q2 GDP – negatives: volatile trade flows, uneven consumer spending, wildfires. Financial conditions remain accommodative, lower CAD helps exporters but may not drive growth. Theresa May officially becoming a new UK PM, Boris Johnson new Foreign Affairs Secretary what may be joke towards EU but he will not lead the Brexit talks with EU.

Thursday – Japan discussed perpetual bonds with Bernanke that would be bought by BoJ, thus underwriting government debt (illegal according to Japanese constitution), JPY weakened, rumoured JPY 10/20/35 trillion fiscal/monetary stimulus by month end. Japan Rating Agency JCR cut outlook to negative from stable & affirmed AAA rating. Schauble-Lew expressed mutual support on Brexit, G20 meeting; Weidmann (ECB) – EU must have solid foundation. BoE - surprising no change in rates, getting ready for August. Job offerings lower after Brexit, businesses cutting investments. US June Final PPI better, Initial Jobless Claims better, previous revised lower.

 

Friday – Italian banking crisis – solution to be found, US funds looking at some buying opportunities in Italian banks. Japanese banks don’t like idea of borrowing from BoJ at negative rates. ECB – non-performing loans in Italian banks a problem but manageable. Weaker JPY an obstacle for helicopter money, UK May Construction output worse, EZ June CPI in line M/Y, BoE to make a 40 bps cut in Aug, launch GBP 50 bln QE in Nov (according to Morgan Stanley), US June CPI lower M/Y, Core CPI higher, June Advanced Retail sales higher, July Empire Manufacturing better but new orders bad, June Industrial Production better, July Preliminary Univ of Michigan Consumer Confidence lower than expected, May Business inventories better. German government to safeguard small investors in Italian banks, creditors to take losses.

Nintendo shares are up 70% on new application high interest. These levels are very difficult to justify versus its peers like King Digital or Zynga. Patience needed before shorting.

Upcoming Week Outlook

Monday – BoE MPC member Weale is out, may provide additional insights on potential rate cut or QE in August. German Bundesbank to release Monthly report, a nice piece providing hints on what risks they see.

Tuesday – RBA releasing Minutes that may shed additional light on what RBA thinks about current situation and possible further easing. UK CPI/PPI – will be watched by markets as BoE is readying for QE; GE ZEW Economic Sentiment for July will show us what temperature German economy has. From overseas we will get Building permits, Housing starts showing us what is the situation in housing market. Expecting June Housing starts at around 1.17 mln vs 1.16 in May. June permits show move to approx. 1.16 mln, higher than in May. Also expecting Home sales to decline to 5.48 mln in June.

​Wednesday – CN Leading index (m/m), UK labor market data will be out, where Claimant count should rise to 4.1k from -0.4k previously, Unemployment rate should stay unchanged at 5.0% and Earnings should rise. We should also learn what how consumers are confident in Europe (Brexit).

Thursday – JP – Industry activity, UK Retail Sales for June (expecting decline), ECB Meeting (live) but no rates change or additional QE expected. The rates should stay at -0.40% (Deposit), 0.00% (Main refinancing) and +0.25% (Marginal lending facility). Definitely closely watched by the market to get the clue on after Brexit vote actions from ECB, situation in EZ economy, QE bond buying and what’s next for Italian banks. Later will have Philly Fed Manufacturing index (expecting rise) and US Jobless claims to rise to 271k from previous week 254k. Later will have CB Leading Index (to return to positive territory).

Friday – will be about July Flash PMI data from all around the world, JP (to rise), FR & GE (both Manufacturing & Services slightly worse), EZ (both slightly worse), UK Manufacturing PMI (worse), US Flash Manufacturing PMI (better). Will also have CPI/Core CPI data and Retail sales from CA (both lower), making the BoC decision makers think whether the last week inaction was right.

The earnings will be monitored by market participants as equity markets are making new historic highs and if they are solid, we may have another shift higher. All those investors sitting on sidelines and hoarding cash before/after Brexit referendum are now moving to stocks. The bond yields started to rise again (risk on outflows) but the likelihood of Fed rate hike, especially due to stronger US data, may inevitable shake the confidence of stock investors. On the other hand, what other options than stocks (dividends) do you have in your hunt for yield?

Event Risk Calendar - Week 29

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice.

All rights reserved ©2016 www.landoftrading.com Contact: landoftradingATgmail.com

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(Tutorial) Land of Trading - Risk - Introduction

Intro - How Big Should I trade ? Trade small to Win Big, start the adventure of the Price Action Trading / Market Makers Method here:

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(Tutorial) Land of Trading - My chart - Intro

Intro - check how my fx chart looks like, get first/basic explanation why I'm trading  * naked * charts, more to come, start the adventure of the Price Action Trading / Market Makers Method here:

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Bank of England on Hold - Carney just hurt risk on... ( UPDATED )

Risk on - the bears just got a good reason to try to stop risk on rally, the question is whether it's going to be enough. Now, we have to keep in mind the Tier-A US data tomorrow and if they are strong that could bring FED hike discussion om the table again. Well, it could be another good opportunity for bears and we may see at least a pullback.

Waiting for US open today for any sign that bulls may be in trouble:
SP 500 FUT, AUD, JPY, CHF and CAD on the list.

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading       teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed   as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from       action where despite this disclaimer someone would consider this  material  as an investment advice. 

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Forex Trading - Live Market Coverage 15.07.2016

Hi all,
Join Us again, we are back tomorrow 15th of July 2016

that's beta test of our Forex Live Market Coverage - Market Makers Method / Price Action / Supply & Demand. ( Page does not refresh automatically ! )

18:16 GMT - missed EURGBP buy opportunity, then after strong US data we have not seen any USD pullback, hence we were not able to go long. I'm sure a lot of opportunities again next week. Have a great weekend !

15:39 GMT - intraday SP 500 FUT trying to break to the downside

14:20 GMT - EURAUD waiting for daily and weekly close, could be very interesting early next week

13:55 GMT - slow Friday market... intraday loking to buy some USD on dip, will update

12:44 GMT - Real avg weekly earnings are better ( +1,2% y/y vs +1,1% prev ) and that could be the key for USD later today

12:00 GMT - Waiting for US data...

11:23 GMT - GBP strong bounce / rally this week ( thx to GBPJPY and BOE ? ). GBPUSD 1,35 as key today.

10:55 GMT - XAUUSD ( Gold ) please check comment on the chart

10:31 GMT - USDJPY waiting for US data, we are testing supply zone based on daily chart 

10:21 GMT - USDCAD waiting for US data, strong data + possible demand around 1,2825 equals long for me

10:09 GMT - ALERT: EURGBP limit to buy at 0,8295, stop offer 0,8258, risk 0,25%

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading       teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed   as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from       action where despite this disclaimer someone would consider this  material  as an investment advice. 

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Live Market Coverage - Trade idea - Selling GBPUSD at market ( UPDATE 3 )

UPDATE 3:
23:10 GMT - market reached our final target at 1,3108, in total we booked +0,833 %


UPDATE 2:
15:31 GMT - close 50% here at 1,3188 and lower the target for remaining 50% 1,3108

UPDATE:
14:14 GMT - bulls are trying to keep 1,3220 alive, stop has been moved lower to entry


GBPUSD selling in market ( 1,3298 ), stop bid 1,3343, target 1,3165, risk 0,25% ( intraday trade, based on idea and chart from ydy Live Market Coverage ) GL

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading       teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed   as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from       action where despite this disclaimer someone would consider this  material  as an investment advice. 

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Live Market Coverage - Trade idea - Selling AUDUSD at market (UPDATE 3)

UPDATE 3:
01:32 GMT - short has been closed at entry level  0%

UPDATE 2:
0,7563 as first target ( going to close 50% if seen )

UPDATE:
19:44 GMT - stop has been moved lower to entry level

AUDUSD selling some here at market ( 0,7628 ), stop bid 0,7658, target open , risk 0,25%  ( that is intraday trade ) GL

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading       teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed   as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from       action where despite this disclaimer someone would consider this  material  as an investment advice. 

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BoE after Brexit

BoE after Brexit

Politics

-          As the petition of 4.1 mln people for a new referendum was rejected by UK government, we are moving to a warming up phase for exit talks and negotiating of best agreements with EU possible

-          Theresa May made it to become a new Margaret Thatcher

-          UK is working and lobbying hard during preparation phase to secure good starting position for official exit talks

-          Article 50 likely to be triggered next year, but any surprise is still guaranteed

-          Highly unlikely, the UK would use Article 50 before they feel and are ready for the talks, as they would have only 2 years to complete them. If not, they will be a third party country to EU.

Economy

-          The principal two industries the UK economy is based on are Finances and Real-estate. I believe there is no need to comment on current developments there.

-          Not only GBP suffers but recent UK data are turning sour as well. A good example was the June Construction PMI that showed first contraction in 40 months with lowest reading since June 2009. The Housing activity dropped in June as well, to lowest level since Dec 2012.

-          Due to Brexit the S&P sees:

UK GDP to decline 1.2% in 2017 and 1.0% in 2018

BoE lowering rates to 0.0% before the end of the year

They also cut the country rating by two notches to AA with negative outlook.

-          Government is looking at lowering the corporate tax to 15% from 20%, to support the business and keep the employment steady

-          EU is pushing UK to start negotiations with immediate effect to reduce uncertainty. The message from Brussels was clear, no cherry picking will happen. On the other hand, in order the UK keeps the access to free market, they would need to accept Four Freedoms of EU: Free movement of goods, capital and workers, and Right to establish and freedom to provide services.

-          Trade agreements – re-focussing on non-EU trading partners

-          Hedge funds and sovereign funds have already started to look around for possible opportunities in UK.

Bank of England (BoE)

Stability Report (released after Brexit referendum) - Brexit risks materializing, outlook challenging, BoE cut countercyclical capital buffer, expecting economic volatility, commercial real-estate risks present, investment decisions being delayed.

Carney (BoE) – BoE to provide substantial FX liquidity, to support jobs and growth, ready for Article 50 trigger and to ban banks from using extra capital on dividends. The Current account risks related to GBP moves and capital flows, weak GBP to support exporters, actions to be focussed on domestic economy.

The Current and Capital account as well as the chronic Budget deficits are huge problem for UK.

Let’s have a look at an interesting formula for UK Current account:

Sum of FDI + portfolio investments + current account = 12.8% of GDP. Portfolio investments and FDI inflows more than offset the Current account deficit of 5.1% GDP, but what if the inflows reverse? UK is still able to finance its current account with foreign money, but likely would need to decrease the consumption at certain point as the inflows reverse also on lower yields.

The market may still be underpricing the upcoming easing despite the GBPUSD printing the 85 week low below 1.2800. We may be looking at 25 bps rate cut in July, one more in August. Definitely, BoE will come up with rather decent QE (maybe additional GBP 100 bln including buying corporate bonds).

Next policy meeting is on Thursday July 14, where we will see whether Governor Carney will keep his word and BoE cuts the rates. The market is assigning the 74% probability of such a step, but other measures, comments and Minutes will be equally important.

GBP – what’s next?

Macro view – lower rates, QE with declining FDIs will be putting pressure on GBP. What about George Soros being right about BoE again and seeing cable below 1.1500 level?

Mohamed El-Erian was out last week saying the GBP can fall to parity to USD, if there is no good Brexit plan that would secure sufficient free trade deal with EU.

Good luck Champs!

Mr Hawk

landoftrading@gmail.com

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from action where despite this disclaimer someone would consider this material as an investment advice.

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