Good morning,  hope you had a good weekend

Having spent my entire career in the Financial Markets and witnessed financial events that could only be said happen once in a lifetime, I find the current environment one that leaves people scratching their heads wondering where the next “inspiration” will come from.

Let me put your mind to rest. While I have no input or the like from those in power, I do know one very simple thing. FX markets are driven by the CB’s to a large degree. I say to a large degree because when I have witnessed CB intervention for what ever reason, it is generally doomed to failure purely because at times there is just not enough reserves to take on the market. While intervention is short lived and has the desired effect, after a number of days or even hours, the momentum is lost. Then there is verbal intervention and more importantly “faceless/invisible” intervention. Basically the CB all get together and quietly agree where they want their currency and then use other Organisations/Large Banks to quietly put this in motion.

Where am I going with this, quite simple really. Look at EUR/USD…whats wrong with it? I’ll tell you, the BIG FIGURE!! 1.3655 as I write this is laughable. Not to mention every trader out there is looking to short the EUR from 1.3675/1.3750, I just question why the EUR remains so “strong”. It ain’t  doing the EU any good that’s for sure.  So to accomplish this let’s say hypothetically the FED and ECB agree that while the US get’s back on it’s feet let’s leave the EUR propped up and then when the time is right let the USD fly giving a boost to EU exports (that are so crucial right now). The point I am trying to make is if one study’s the FX Options market you will know that current levels of volatility (all time lows) represents an environment of limited opportunity and trend. The more difficult it is to second guess the move the more stable the currency. The more stable the currency the easier it is for the CB to control the flows. So I salute the CB Governors for doing an exceptional job. They should all be knighted for their contributions economic stability.

This Thursday (3rd July) sees NFP/US Employment report and ECB meeting. Intra week volatility will be buoyed by this especially with vols are critically low levels. Teh market will generally behave like sheet and try ride whatever wave (big/small) to make money. I do not think we will see any “out of the ordinary or shock” numbers on Thursday and therefore remain cautiously optimistic that the EUR will remain trading sideways within a narrow range. 1.3750 is my top. My bottom, well you know what it is…and what it should be.

GBP/USD will in all likelihood follow the EUR but not in as much vigour. This will keep EUR/GBP on the back foot all week before seeing a resumption of the GBP strength.  As I have suggested previously if you are a buyer of Foreign Currency (EUR, USD etc etc) I still think these are very attractive levels. If you can wait as it is not urgent, I think you will get a better opportunity. Then again a bird in the hand is worth 2 in the bush!!!

Have a GREAT week ahead


Good morning

Looks like we are going to end the week with GBP holding onto to recent gains. GBP/USD currently trading at 1.7030 and EUR/GBP at 0.7995. After the roller-coaster week GBP has had, I think there will be a number of GBP traders breathing a sigh of relief. It was touch and go earlier this week when Gov. Carney gave the market a scare and GBP retraced gains, only for his comments yesterday to re-enforce his original comments about rates being hiked in Q4 2014.  I know I might sound like a parrot (repeating myself) but trust me when I say, Gov. Carney and the MPC members will have to think long and hard and be absolutely sure when they raise rates. The last thing they need is to hike rates and see a fall in GDP and contraction in the UK economy. Disaster!!

so my main themes for the coming months are: (1) A stronger USD, (2) A weaker EUR, (3) A Stronger GBP (ag EUR), (4) a weakening of EM currencies, specifically, ZAR, TRY, BRL, MXN, (5) Lower US Treasury prices (in line with a US rate hike), and finally (6) US and UK rate hikes in 2015 (I reckon).

In line with the above, and as we start to see a clearer picture of when rates will likely be hiked, the market will begin to sell the USD treasuries  curve, and at the same time for the USD to outperform other G7 currencies.   Coupled with the drastic actions the ECB is having to take to delivery the much needed policy measures, there is an expectation that all these pieces of the puzzle will start falling into place as soon as September.  I have said that 1.3480 in the EUR is critical and a break will open significant loses thereafter. So if you looking to hedge (buyers of EUR/USD) try hold out for now because chances are you will get a better opportunity. On the other hand, GBP importers (selling GBP buying foreign currency) these are awesome opportunities for you and in my opinion you should be trying to hedge a good proportion of your book now.

If your business requires you to BUY EUR & SELL GBP, again my view is that the GBP will continue to strengthen and so for now if you are able to sit on your hands and withstand any intraday volatility, then try doing so. That is my opinion based on the price action I have seen over the past fortnight. Having said that if you prefer not to wait then hedge up to say 35% of your book and wait on the rest. Having spent many years trading FX Options my philosophy has always been simple, “it is never too early to take profit, purely because I don’t have a crystal ball to second guess the market”.  in plain English, yes there are times when it is good to let your profits run, but there are also times when you have a decent profit which should be locked away.

That’s all for today. Hope you have a magic Friday and a pleasant weekend. See you Monday



Good day, and apologies for the late writing of the Blog.

GBP has mounted an attack. Having been battered yesterday to 1.6950 levels, we have seen a fight back all morning with the GBP currently trading at 1.7028. In my opinion, Gov. Carney is trying to say too much without giving up his hand. He wants to try cool things and prepare the market for the future, but at the same time he is blowing hot and cold. Caught between a rock and a hard place, sometimes the best option is to lay the cards on the table and then keep repeating the same things so as not to give away any other info best kept under wraps. It is for this reason the market is starting to “fall out” with Gov. Carney. They just can’t work out what he is likely to say next.

Take this mornings comments (Financial Stability Report). On June 16 everything rocked, then a few days ago that was all turned on its head when he spoke of the labour market, and today he went one step further and said hold on the biggest risks to Britain’s recovery stem from the housing market and as such introduced measures to limit riskier mortgages and prevent an unsustainable buildup of consumer debt. Let’s be honest for a minute!!! The financial crisis of 2008 was caused by exactly that, housing bubble, mortgage bubble and most importantly consumer debt. Banks were “handing money over” to anyone who wanted it. 100% mortgages, loans, buy to let mortgages you name it people were up to their eye balls in debt. And then like a good pack of cards, it all crumbled into crumbs.

I find it hilarious how some Banks are looking to make up revenue for loses or lower revenue from trading. They not only have to make sure they are fully capitalised according to “Base lII”, but also make available loans to consumers and corporates to rebuild their balance sheets. Put it this way, when last did you go to a Bank for a Loan and walk out smiling?

Gov Carneys actions were  prompted by booming demand for real estate and an increase in high loan-to-income mortgages. Today’s announcement is the boldest effort by a major central bank to actively tackle the threat of an asset bubble and avoid a repeat of the 2008 financial crisis. Carney added, “With recovery in the U.K. gaining momentum, the Bank of England is now focused on turning that recovery in to a durable expansion. Britain has a legacy of high indebtedness that if left unchecked could undermine that durability. The biggest risks relate to the housing market.”

In a separate announcement, the Chancellor announced that mortgages taken out under Help to Buy, a government program guaranteeing loans to people with small down payments, will be capped at 4.5 times income. So now the fun starts. The days of easy money are behind us. It might be “cheap money” but try get your hands on it and you are lucky. My point is people HAVE to cut their cloth according to their means!! It really is that simple.

Back to the markets,  I still hold onto my views that the GBP will appreciate vs its major trading partners (€, $) as the economy continues to outperform its major trading partners. Furthermore I think come Q3, the $ will mount a major move (stronger) ag the € especially and it is for this reason that I suggested looking at doing either ratio calender spreads or straight even ratio calender spreads to take advantage of this.

Last point if you had not seen it already US GDP came out at a woppingly  poor -2.9%.  I guess now you see why I have been going on about the timing of any rate hike and how important it is to GET IT RIGHT the first time

Take care and all the best


Good morning

The Governor of the BOE came out fighting yesterday by “tempering” speculation as to when the UK base rate is likely to rise. After the euphoria at last weeks meeting that rates will have to rise sooner rather than later, Gov. Carney has now sent the Economists and Traders back to their think tanks wondering when this is now likely to happen.

Gov Carney told the Treasury Select Committee that there is some additional spare capacity in the UK labour market that can be absorbed before the need for the base rate to be hiked. He further stated that the timing of the hike is not as important as the fact that any increase in the interest rate will be limited and gradual.

As expected the FX market reacted badly with the GBP/USD falling from 1.7025 to 1.6970, while EUR/GBP weakened from 0.7992 to 0.8025. While many of us will view this as a temporary “glitch” it is still quite significant because for now the “wind has been taken out the sails”. I have no doubt the market was heavily LONG GBP (vs USD and EUR) and the comments caused the traders and the market in general to cut their positions until new information or rumours surface. It would appear that for now there is probably more to come (GBP weakness) before support levels are reached and the market decides these are good levels to re-instate LONG GBP positions.

US GDP numbers to be published at 1.30pm (UK time). Previous was -1.00% and the consensus is for the latest number to come in around -1.70%. So going back to Fed’s Yellen’s comments last week, you can see there are still issues to be resolved before they are in a position to hiking rates. As I have mentioned on a number of occasions, the timing of any rate hike is monumentally important because a hike when the economy is not ready will destroy all the years of good work that has been done (Look to the ECB and their decision making experience).

FX Volatility pretty much unchanged with the options market continuing to see sideways trading over the coming months and thus happy to remain sellers of volatility and earn decay/theta/premium. 1m EUR 4.60/4.80, 1m GBP 4.50/4.80. 1m JPY 4.80/5.20, 1m EUR/GBP 4.55/4.75 all trading near their all time lows. Once again the CB’s have managed to take the spark out the FX market and with it the ability to “manage” their currencies better. Make no mistake, whether it is verbal or actual intervention, CB’s indeed have a very good handle (generally) over the direction their currencies are heading.

Yesterday also saw the German IFO (German Business Confidence) numbers published. 109.70 vs 110.40 (previous) pointing to a slower expansion of manufacturing output and order volume.  This should weigh on the EUR especially as the German economy is the strongest amongst EUR members.  Then again what should happen and what actually happens is very different as we can see by the price action in the EUR/USD. After the number was published, spot fell 10 pips and recovered almost as quickly.

Oil prices, which have remained quite stable in recent years have started to move higher in response to the situation in Iraq. This is likely to result in a phase of higher long term prices and increased volatility. In turn this could result in increased inflation as countries who are net importers of oil are likely to suffer as a result of the shift. Once again the world is being drawn into the religious differences in the M.E. If only Nelson Mandela was still alive and able to help. The greatest statesman I am sure could have helped.

Have a good day ahead


Good morning

Tricky trading conditions my friend.

German IFO just been published at 109.70 from 110.40 last reading. EUR reacted initially by falling 10 pips ONLY.  It has now recovered back to where we opened this morning at 1.3605. As if nothing has happened and yet German confidence has taken a knock!! Who said FX markets were not easy to interpret.

From what I can see I get the feeling the market is looking to take the USD (ag the € and £ especially) higher so that it can then re-enter long USD positions. There seems to be a great deal of talk around this subject now. There is no good reason for the EUR to rally, which tells me the market is hell bent on shorting the EUR, but not “happy” to do this at these levels. If they can muster enough rhetoric the market (they hope) will gradually drift higher giving the market markers the opportunity they are seeking. That of course is the ideal situation though whether it happens is of course another thing completely. Truth is we are trading in such narrow ranges right now, people are looking for any sign to make money.

GBP – The market is waiting for Several members of the MPC (Carney, Bean, Miles to address the treasury select committee from 9.30 am London time to discuss and explain the May Inflation Report. As previously mentioned the market is looking for sign posting towards the timing and size of any rate hike and I would believe that the outcome of this will be GBP positive. GBP volatility has been very low over the past few days but this could be the jump start required to push Cable towards 1.7100 and EURGBP towards 0.7950. After this morning IFO coming out weaker, EUR/GBP seems to have the most potential, looking for the market to breach the downside 0.7950 and break down towards 0.7900-10 and only re-think above 0.8040. Cable support at  1.7000 and 1.6935-40 Resistance at 1.7100 (barrier and retail sellers).

Plainly put the divergent Monetary Policy’s between the ECB and BOE are likely to keep EUR/GBP somewhat offered. The comments at 9.30 are going to be paramount and should reinforce Gov. Carney’s recent comments that the Bank rate will rise sooner than the market expects.

I will write more AFTER the meeting at 9.30am  – Good luck


Good morning, hope you had a good weekend

As I mentioned in some of my @Parityfxplc TWEETS, now that the 2 main CB meetings are out the way, market participants are going to be looking for the next “big story”.  This week economic numbers are on the “soft” side in that other than various European & World PMI (purchasing manufacturers index) and German IFO Business Climate index (prev 110.4 exp 110.2) there is not much else to get excited about. Don’t get me wrong everything that comes out matters, it is just the importance and significance of the number that I refer to.

Gov Carney will be speaking again tomorrow (Tuesday) at 9.30am so we need to keep a watch on that. But let’s face it. What else can he say that we don’t already know.  The reason for my confidence in saying this is if one looks at o/n GBP vols currently being quoted 4.25/7.00 this represents a number that says nothing new expected and no fear factor required. The options market is therefore happy to sell o/n options cheaply as they do not see this as a risky trade. Remember, the higher the volatility number the greater risk the market is applying to that event. So for example the day before the last FOMC meeting, o/n EUR vol was trading around 10% from its normal 3-5%. In other words the market is happy to buy insurance and charge a greater premium if it gets “paid” by the clients.  All in all having come in this morning and taken a look at the vol surfaces across the “actively” traded currency pairs, nothing really stands out. Vol are a touch higher this morning compared to Friday’s close, but the reason for that is the weekend factor (2 days of paying time decay/theta) is taken out the equation.

So what now for the currencies…lets discuss a few

EUR/USD – Once you get to know me and how I think you will know that at times I am like a dog with a bone. I don’t let go, and so once again I will reiterate what I have said before, I really think Q3-Q4 will all be about the USD and I see the currency moving and breaking 1.3000 by year end. Yes, medium term projections but for me to take advantage why not do a calender spread, selling 2x 1-2m VS buying 1x 4-6 months and so leg into the trade. If not 2×1 then how about 1×1, but remember you will have negative gamma but positive theta which in this environments works.

GBP/USD –  trading close to a five year high, and one of stars of the show. GBP has been supported by the recent CB policy outlooks and any aim to try dampen this will fall on deaf ears. You can’t pull the starters gun and then call the racers back half way down the track. Clearly there is shift at the BOE, and they have laid the groundwork for this to prepare us for the inevitable.  Until we hear something from Carney tomorrow I suspect GBP will trade sideways within a tight range. 1.6985 remains key support while 1.7045 remains key resistance. Breaks of either will see an easy 50-75 pip move in that direction.

EUR/GBP – for many people remains a “hot” ticket. Speaking to various GBP traders we all appear to be thinking along the same lines that GBP will rise against the EUR over the coming year. One cannot predict that rise of course but critically 0.7920 0.7850 0.7775 and finally 0.7700 are some of the opinions. I think 0.7920 needs a clean break. Putting the numbers together if we do see 1.3500 (€-$) and say 1.7000 (£-$) that’s equivalent to  0.7940…so I guess you see my point.

Wishing you a great week ahead.


Good morning

Apologies for writing this so late today.

So with all the CB meetings out the way and a better understanding of what their thinking is regarding interest rate (hikes) and the state of their economies, what should we be looking for now and how has the market absorbed this news.

As a FX Options trader I always look to these numbers to see what the general consensus is regarding the short, medium and long term outlook for the currency.  A FX Option basically is the right but not the obligation to buy or sell a particular currency at agreed upon rate (the strike) today in return for a premium (cost).  I have always found Options to be a better way of adding or reducing hedging requirements as you know within reason (depending if you a buyer or seller of the option) what you maximum upside and downside is.

So looking at the major currencies, and for our purposes lets stick to EUR/USD,  GBP/USD and EUR/GBP.

EUR/USD: this is the most actively traded currency in the world and as such the most actively traded FX Options contract. Looking at the 1m vol at 4.55/4.70 tells me from experience that the market is anticipation VERY LITTLE volatility and is thus happy to SELL these options and earn the premium. The last time we saw vol’s at these levels was over 10 YEARS ago!! I remember those summer months clearly. The rates created havoc amongst option traders who had no interest in hedging or buying volatility. They were happy to sell these options and earn the premium and hedge in the spot market as and when they needed. With the 2 CB meetings out the way, the market has fallen from over 7% (2 weeks ago) to these levels. With the lack of news and Summer around the corner, the market anticipates very little movement in the currency to warrant owning these options and paying away premium (daily) with very little opportunity to recoup the premium from daily trading.

GBP/USD vol have also been smashed though they were no where near 7% like the EUR above. They are down 1% with the 1m vol trading at 4.65/5.00 again showing the lack of interest in owning “vol”. The back end of the curve (6m-1y) is a lot higher and the curve steeper because this takes into account the much anticipated rates hike. 6m is trading at 6.50/6.85 and the 1y at 7.60/7.90 which tells me they are anticipating movement in the coming months.

EUR/GBP vol following the lead of the EUR and GBP vols above, despite trading below 0.8000. Once again the curve is quite steep with the 1m at 4.35/4.50, 6m at 5.55/5.85 and 1y at 6.05/6.30 and little in the way of decent flow going through. The best way to take advantage of these vols is to do “CALENDER SPREADS” where by you SELL the front and BUY the back end of the curve as a way of hedging yourself.

If you would like any more information or advice of FX options JUST ASK and I will be happy to help.

As for spot, the EUR/USD is trading around 1.3600, there is a EUR2bn option expiry today strike 1.3600 which tells me the market will in all likelihood remain around this level until 3pm expiry time.  Unless the EUR can mount another challenge higher, I for one continue to call for a sell off (Buy USD) as we head in and out of the summer and the market starts to reposition itself. I still think we HAVE to break 1.35-1.3480 to confirm the next leg lower.

GBP/USD heading in my direction. I have been calling firmly for a break through 1.7000 (1.7040 now). GBP must remain above 1.7040 to confirm the next break higher. A failure will see a move back to 1.6980 -1.6960 again. Having said that I still like GBP stronger.

This all means EUR/GBP should remain below 0.8000 (1.2500) and my target is for 0.7050 (1.2580) in the coming days.

This all bodes WELL FOR GBP IMPORTERS who need to buy foreign currency (sell GBP). I am afraid the same does not hold true for Exporters selling foreign currency to BUY GBP. Unless you hedged yourself I am afraid to say the ship has left the harbour.  All you can do now is either forward hedge OR my favorite do a Risk Reversal buy BUYING GBP Calls and SELLING GBP Puts – zero cost. That way you have your hedge in place and you know your best and worst case scenarios.  Again happy to discuss and explain.

Wish you a pleasant weekend ahead


Good morning

FED’s Yellen finally dropped the hint. They are NOT as hawkish as one would have thought. Stocks exploded with the S&P hitting an all time high 1957.74 and the Dow closing in on 17,000 (close 16906). What a difference a few years and a soft monetary policy makes. Both the BOE and the FED know that their hands are tied for now and the longer they delay raising interest rates the better their economies will be in the long run. We saw last year when the ECB jumped the gun and raised rates only to realise a month or so later that they messed up proper and reversed that hike. That was when rates were 1.25%, look at where we are now 0.15%. As long as the economy has time to get back on its feet and grow by way of low rates, the CB’s must be somewhat pleased with their ability to steer the economies through the turbulent waters and into sunshine and samba.

Bank Of England Monetary Policy Committee member Martin Weale noted there is no immediate need for the BOE to raise interest rates. He went on to say, this of course could change as we head into Q4. In his own words:  “At the moment, I don’t see a case for an increase in
interest rates and I would be surprised if that changed in the near future. Later in the year would be a different matter, I will have to wait to see how the economy evolves and pressures in the labour market.” The BOE is basically trying to man manage the “forward market” so that there are no knee jerk reactions if and when they (potentially) raise rates in 2014.

Retail sales at 9.30am (this morning) the consensus is for a -0.60% drop from +1.8% rise last month.

I OWE YOU AN APOLOGY.  Yesterday I noted USD/ZAR had broken through 10.8050 level and was firmly in a bear channel to 11.0600 area. The only problem i never foresaw was CPI would come in at +0.2% which super excited the market moving the ZAR from 10.8350 to 10.7850 and which was further buoyed by Yellen’s comments last night which pushed the EUR firmly above 1.3600 (currently 1.3630). There is a huge correlation between EUR/USD and USD/ZAR. Because the Eurozone is SA’s largest trading partner any moves in the EUR will have significant impacts on the ZAR.  The rally in the EUR o/n has added to the ZAR’s strength which is currently trading around 10.6400.

EUR/GBP taking an almighty knock. After yesterday’s 9-0 vote, the market decided it was time to take profit and has since moved the currency from 0.7970 to 0.8015 currently. GBP/USD is trading above 1.7000 (1.7010) and a move to 1.7040 is now on the cards as it plays catch up to the EUR.

All in alll with the 2 major news events out the way FX Option Volatility has been hammered. 1m EUR/USD down to 4.7250 mid (-0.50% o/n – new lows since 2007), 1m USD/JPY down to 4.95 (-0.65% o/n), 1m GBP/USD down to 4.50 (-0.50% o/n) and 1m EUR/GBP 4.625 mid (-0.375% o/n) … These are levels we have not seen for nearly 10 YEARS!!! What this tells me is the CB’s have done an outstanding job in “managing” the currencies to such an extent that it has all but taken the wind out the sails. And summer is on the way!!! that all spells MORE losses potentially.

Have a good day ahead



Good morning

Bank of England minutes out at 9.30 UK time today. The bullish tone to GBP just prior to Carney’s speech and since should remain. I think any movement in interest rate stance , voting patterns (did anyone vote for a rate hike now)  and rate movement (any more signs of when they are likely to pull the trigger) will be well addressed. With this in mind it is always best to tread cautiously on the minutes announcement given the risk reward angle (one of the MPC members already voting for a rate hike).  Any 9-0 vote will not cause too many ripples but not enough to keep GBP on the front foot.  I would cautiously buy GBP at these levels and then look for a  break of 1.7040-45  which is a 5 year high, which to me signals the break is solid.  Cable Support 1.6915-25 Resistance 1.7010 1.7040-45

EUR/GBP will follow the lead of the GBP/USD. While the EUR zone remains in the doldrums for now, it is essential that the focus remains on the GBP. The mere fact that we have opened this morning in positive territory and in such close proximity to psychologically important “break” levels leads me to believe that the market is preparing itself for a knee jerk move before settling down and digesting the news. It will be interesting if nothing else. One thing is for sure if the vote was 9-0, GBP will fall back before finding its feet again (wobble shock). Support still at 0.7950 , 0.7920 Resistance 0.8020-25.

EUR/USD teetering around 1.3550.  For the past week most pundits (including myself) have been calling and looking for the EUR to break 1.3500. I think Yellens FOMC comments tonight could very well bring that to the fore as we are likely to get a better idea of when they are likely to change their Monetary policy. If you asked me at the begining of the year my thoughts on the USD I would have said BUY IT. Granted for the first 6 months I would have been sweating some!! I think the next 6 months are likely to bring out the USD bulls en masse with talk of rate hikes on the distant horizon.  1.3480 for me is the crucial level to get through and stay under before we see another leg lower. However this morning’s MPC minutes could have it’s parade rained on. The best way to take advantage of this is BUY OPTION GAMMA (short dated options).

USD/ZAR has broken through 2wk triangle resistance at 10.8075. This should provide the fuel to make a move to  11.0600. USD/ZAR has potentially resumed its long term bear trend in our opinion after disastrous economic numbers showing the Country is lagging massively behind its BRIC members.  The mining strike has had a marked effect on the ground. My view is that USD/ZAR could very well be on its way to new 2014 highs of11.3915 reached on January 30th this year. As I write this CPI has just been published at +0.2% (consensus 1.00%) which moved the ZAR from 10.8350 to 10.7950 (Currently 10.8050)

Have a good day ahead and let’s be careful out there


GBP CPI just been published at 1.50% down from 1.80% (consensus 1.70%). Very good number all things considered (Housing growth).

In my opinion this is a very muted reaction in the currency markets  I would think GBP would continue its bullish tone again look for 1.6915-25 to hold in GBP and  0.8020-25 to cap EUR/GBP. Downside support for EUR/GBP 0.7950, 0.7920  Cable resistance 1.7010 1.7040. All in all these inflation numbers have spooked the market with a 0.20% reversal in recent gains. While I still feel comfortable that GBP will rally these pullbacks are always “healthy” for the market as it forces the day trader to cut their positions thus lowering the weighted positioning in GBP.

Tonight the Fed starts their monthly FOMC meeting. A $10 bn reduction in the Fed’s asset programme is expected this Wednesday (FOMC meetings last 2 days), which would bring the total amount it buys to $35bn per month. But it is Yellen’s press conference and the latest growth, inflation, and rate forecasts that really matter for markets.

While growth is expected to be revised lower because of the disappointing start to the year, inflation could be revised higher, which may give Yellen more room to indicate she might be willing to tighten earlier than currently expected. The forward curves are expecting the first rate hike from the Fed in May – August 2015, potentially five months after the BOE. Tomorrow’s announcement will give us an insight as to whether Yellen intends to lower this gap.

The market therefore, appears to be expecting a hawkish Fed. The past week has seen buyers of USD’s. Having said that the past 24 hours USD holders have parred their positioning and so if Yellen fails to deliver, and sticks to her uber-dovish mantra, we could see downward pressure in the USD, which could boost both the GBP and EUR.

Have a good day ahead