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Forex Analysis (Wed October 20 2010, 4:30am NY Time EDT) - UK MPC Meeting Minutes

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Oct 19, 2010.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

    Jul 5, 2010
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    MPC Meeting Minutes is scheduled to be released today and since it is customary for BOE (Bank of England) not to release a statement along with its interest rate decision (2 weeks ago) if there were no changes in either rate decision or APF (Asset Purchasing Facility, UK’s quantitative easing program), today will be the first time for a glimpse into what took place during this meeting, here is the forecast:

    4:30am NY Time UK MPC Meeting Minutes Forecast 1-0-8 Previous 1-0-8
    ACTION: GBP/USD BUY (2 Vote For Hike) / SELL (2 Vote For QE)

    The Trade Plan
    We will be looking at the vote count today. If we get 2 votes for hiking 25 basis points, we should see some strengthening in the Sterling and a BUY GBP/USD trade should be justified. If we get 2 votes for quantitative easing, or to increase the currency APF from 200 Billion Pound, GBP should weaken and a SELL GBP/USD trade should be justified.

    Due to the nature of this release, you need to have a newswire or audio service in order to trade it. We should see a steady market reaction after the release and possible carry over to the NY Session.

    I'll be looking for an after news retracement trade. For more information, please read:
    Henry's News Trading Methods.

    The Market
    Once again, MPC or Monetary Policy Committee, from Bank of England (BOE) will be releasing their meeting minutes on the Rate Decision meeting along with the actual vote count over the rate decision and the Asset Purchasing Facility program. If you recall, MPC once again left both intereste rate and APF unchanged.

    We’ll have to pay more attention today and look for the vote count on both the rate decision and APF program. If there are more than one dissenters in either vote, we could see market react to it immediately and we’ll analyze the vote and possibly jump into a trade.

    BOE Andrew Sentance is expected to be the lone dissenter again wanting a 0.25% rate hike. With the recent high sustained inflationary pressure in UK, exceeding the 3.0% annual target, we may see more speculation leaning towards a possible rate hike.

    BOE Adam Posen, on the other hand, has been calling for an immediate increase in increasing the stimulus, or APF. If we get any vote on the APF other than unanimous, market could take this as a sign to sell-off GBP.

    Additional Thoughts
    Recent uncertainty in the market is generally making the case for further stimulus weaker than ever for the MPC. On one hand we are looking at a steady inflationary pressure and better than expected GDP releases, but on the other hand economic activities and future GDP growth have been dropping. This Meeting Minutes should provide an idea of what BOE is planning in the near future.

    Pre-news Consideration
    Market could still be consolidating recent USD losses, therefore stay out of pre-market.


  2. rifearmo

    rifearmo Recruit

    Oct 2, 2010
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    Thanks Henry
  3. Mohd Amirul Nazri

    Apr 14, 2009
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    thanks henry :)
  4. amar_butt

    amar_butt Recruit

    Jul 11, 2010
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    thanks sir, but what if it will be released as expected?
  5. DumbAsArock

    DumbAsArock Private, 1st Class

    Aug 14, 2010
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    Then it may be time to forego forex and contemplate the nature of the universe (I've read too much of Felix's stuff ;>)

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  6. Player

    Player Private

    Feb 17, 2010
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    Thanks Henry. Your pointers are so much appreciated by small traders such as I. Cheers

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