Aug 4th 2016: High Expectations for the BOE

• This morning, UK and world markets will be waiting with intense anticipation for the latest Bank of England meeting. After taking a ‘wait and see’ approach in the July meeting analysts are now expecting fireworks from the central bank, especially after a series of lacklustre economic releases during July. Most analysts expect a drop to 0.25%, but a bigger cut, even to negative rates is a possibility. The pound is slightly weaker this morning after a couple of strong performance in recent days.

• Elsewhere, the EUR/USD is steady after hefty losses yesterday.

• The dollar pairs are generally performing better, with the AUD/USD climbing as the dollar index dips.

• The USD/JPY is on the rise, reversing some of the earlier week excesses.

• The Bank of England statement is at 12.00, with Carney speaking at 12.30.
• US unemployment claims follow at 13.30.

Trade Idea: 

• The USD/JPY is pausing after days of heavy selling, but this could be a good selling point as the underlying factors behind the pair’s losses remain the same.

• A good way to play this is a LOWER trade predicting that the USD/JPY will close below 101.00 in 12 days for a potential return of 153%.

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