US indexes fell when dropping profit in financials firms replaced fears of inflation. The story doesn’t end at least for the British pound; Retail Sales is ahead and it is expected to show another decline in May.
How: Minutes of MPC in addition to CPI are sufficient to expect that the market has fully priced recent data and the upcoming data could be seen as a force against the current balance. When consideration of rate rise, as reflected in the BoE minutes, seems unable to support sterling, I think that another decrease in Retail Sales is just likely to add more concerns.
What: So, if the profit is in selling pound then the problem is to find something to buy. Morgan Stanley's today report just revived concerns on continuation of credit crunch, shaked market sentiment, and weakened dollar position; making a scene for buying Yen or Swiss Frank.
When: Swiss national bank is to set the rate in the next 12 hours, and selling GBPCHF would be more easy if technical conditions was somewhat better. Selling GBPJPY is another option; however any decision highly depends on improvement in Technical aspect.
June 18, 2008
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UK retail sales unexpectedly rose 3.5 percent when the median estimate was a 0.1 drop. Before that, the Swiss National Bank set the rate unchanged and the bank's statement showed that they are relatively not worry about inflation. The combined effect on sterling and especially other currencies was very dramatic. (please read the next post)
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