IIFT Daily Note with Peter Brown

Low interest rates forever!

Posted by:  |  Time: 7:40 am  |  Topic:  |  Comments: 1
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Cagney the BOE head and Draghi from the ECB, both stating interest rates will stay low for the long term. What are they expecting that would prompt them to make such dramatic statements. Normally Central bank heads keep their cards close to their chests. They must be worried and rightly so. The Portugal situation, Greece, Spanish unemployment, the Irish Banks. The list goes on. Remember the Euro crisis is only stalled via the OMT programme. A promise to buy bonds if things go wrong. This bluff will be called at some stage.

However the stock market loves low interest rates and that is why we rallied hard yesterday. Euro lower on lower interest rates. The fact is, when the dust settles , yesterday’s announcements is not good news.

Today however we have Non Farm Payrolls. Expecting 165k. I feel all the risk is on the downside following the recent rally. I am looking to sell the market. If it is a good figure we should get a small bounce which I will sell into. If it is a bad figure I will just sell. Only thing to watch for is the perverse rally on a bad figure due to expectations of continued QE.

Levels today after yesterday’s breakout  S&P  1647 1620   Euro  1.2935  1.2880

One Comment

Colin Gregan

July 5, 2013

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I agree Peter. Interest rates a big driver of FX markets and Euro is breaking through moving averages to the downside. Is the move lower now on?