Trading with point and figure

cable 4 hour bars...tad overbought
 

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yu just dont know wwhether that is a fake bear signal at break of green trendline or whether its still bearish
prev supp at 12269 to 12318 area/purple horizontal
12318-12367 big rez area
gets bullish over 12.4K

ugh.....
 
in minor supp area....will it hold
rez starts at 12205....was a supp yesterday
12235-12249 bigger rez
 
first move
poss test of 12205
or could zip to 12050 and poss 12022
think that 12205 could get a hammerin
lets see
 
- Services PMIs in focus ahead of BoE and CNB rate decisions; US jobless
claims, and more corporate earnings accompany French, Spanish debt sales

- BoE: focus initially on vote, then on tweaks to forecast, some risk of
MPC over-interpreting June CPI fall, likely to emphasize GBP gain vs USD
less important than continued GBP TWI weakness

- Services PMIs: Eurozone expected to remain robust, some downside risks
to UK reading following Construction PMI drop: US ISM seen dipping, but
still well contained within year's narrow range

- Czech rates: modest initial rate hike expected, trajectory in focus

..........................................................................

********************
** EVENTS PREVIEW **
********************

Services PMIs globally, Turkish inflation readings and US weekly jobless claims are the key statistical items for the day, though the BoE's Q3 inflation report and rate decision will likely be the primary point of focus, with an expected initial rate hike in the Czech Republic a further point of interest. There are also multi-maturity auctions in France and Spain, and of course another rash of corporate earnings.

** World - July Services PMIs **
- As with Tuesday's Manufacturing PMIs, forecasts for today's Service sector readings look to be rather agnostic, though clearly indicative of solid growth momentum in the Eurozone and the USA. Of particular interest will be UK reading, the more so after the relatively drop in the Construction PMI (51.8 vs. 54.0), with which it is quite often closely correlated in month to month terms. The consensus sees little change at 53.6 vs. June's 53.4, which is close to the bottom of what has been a tight range for the year of 53.3 to 55.8. For the US Non-manufacturing ISM, which like the UK Services PMI has been in a very tight range, even including the outlier drop in March, a marginal drop to 56.9 from 57.4 June's, while the key Business Activity Index is seen at 59.8, which would be only the second sub 60.0 reading this year. Of specific note will be whether the Prices Paid index (last 52.1 and typically very volatile) picks up as sharply as its Manufacturing sector equivalent (62.0 vs. 55.0).

** U.K. - BoE rate decision and Q3 Inflation Report **
- The dip in the UK June inflation data, and broadening signs of a significant loss of momentum in the economy, in no small part due to Brexit related uncertainties, notwithstanding the reported modest pick-up in Q2 GDP, has offered the BoE's MPC some breathing space, after the relatively steep rise in consumer prices over the past year, which was threatening to force the BoE's hand on rates. That said there are still a small minority of forecasters looking for a 25 bps rate hike today, in line one might say with an 8.5% probability discounted by markets, with a 54% chance seen of a February 2018 hike rising modestly to 74% by the end of 2018 (see table). After the surprise 5-3 vote in June, and the departure of long-term hawk Forbes, today's vote is seen at 6-2, though there has been much speculation about whether Haldane will switch to the rate hike camp. The question then is how the BoE tweaks its inflation and other forecasts in its latest inflation report, given that the June CPI dip was mostly due to base effects, and base effects in Q3 are very adverse, not to mention tariff hikes just announced by British Gas and Virgin Media - per se suggesting that a 'serious discussion' about hiking rates will still be necessary come the Q4 Inflation Report in November. As such the BoE will need to be very careful about the signals that it sends this week, particularly in light of the quasi debacle of the past two months.

** Czech Republic - CNB rate decision **
- The CNB is seen instituting a much anticipated move away from the zero bound with a 20 bps hike to a still paltry 0.25%. It should be reasonably satisfied that the removal of the EUR/CZK has not seen the CZK spiralling higher, in no small part aided by the current bout of EUR strength. Market opinions are divided about whether the CNB moves this week or in September, with a small group seeing a hike delayed to Q4, predicated on the idea that there should be greater clarity by then about the ECB's next moves. Still, above target inflation, robust growth, a rapidly tightening labour market pushing wages higher combine to offer plenty of reasons to initiate a move, particularly as it will also have a fresh set of staff economic forecasts to hand.


from Marc Ostwald
 
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