Aug 5th 2016: Carney Lights the Fuse

• This morning, the British pound is stable after a historic interest rate cut yesterday down to 0.25%. This was expected, but Carney and the MPC went further than expected with regards to Quantitative Easing. The stimulus package rose above expectations, with innovative terms aimed at rewarding firms with strategic importance to the UK. The pound sunk against all currencies, notably the Australian dollar which has held up so well this week.

• The US dollar is trading lower, as money continues to flow back into the USD/JPY.

• Other yen pairs are following suit, with the EUR/JPY hitting consecutive down days.

• The Australian dollar continues to outperform, with the New Zealand dollar following this morning.

Coming up today: 

• This morning, we have UK Halifax HPI at 08.30.
• The day’s main highlight is US non-farm payrolls at 13.30, released alongside the unemployment rate and average hourly earnings. Equivalent Canadian data is released at the same time.
• Canadian Ivey PMI follows at 15.00.

Trade Idea: 

• The AUD/USD is one of the week’s top performers and with the RBA statement out of the way, this could continue.

• A good way to play this is a HIGHER trade predicting that the AUD/USD will close above 0.7700 in 10 days time for a potential return of 156%.

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