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Tightening Back On The Agenda

Global coordinated monetary policy tightening is back in play after a hawkish shift and the BOE and a bump in US fortunes. The pound soared after the MPC while the New Zealand dollar lagged. The Asia-Pacific calendar is light later but there are rumors of a North Korean launch. Our Premium long in GBPUSD hit its final target for 230 pip gain.

The MPC said some withdrawal of stimulus is likely in the coming months in a move that came as somewhat of a surprise. The pound climbed 150 pips on the headlines and added another 50 when Carney revealed he too thinks the possibility of a hike has “definitely increased.” Cable ran to 1.3400 in a fresh cycle high and finished at the best levels of the day.

The US dollar caught a bid early in the day after CPI rose 1.8% compared to 1.7% expected. Not long after the data, the questions started to mount. Wage numbers were soft and it appeared inflation was boosted by an unusual jump in shelter prices.

Chatter about a weak retail sales report on Friday also did the rounds, in part due to skews from Hurricane Harvey. Finally, Mnuchin sounded a worried note no growth late in the day that contributed to USD/JPY selling down to 110.25 from a high of 111.04.

Finally, Bitcoin fell 13% after China announced it will shut all local exchanges by the end of the month. It last traded at $3348.

Ashraf Laidi
Ashraf Laidihttp://ashraflaidi.com/
Ashraf Laidi is an independent strategist and trader, founder of Intermarket Strategy Ltd and author of "Currency Trading & Intermarket Analysis". He is the former chief global strategist at City Index / FX Solutions, where he focused on foreign exchange and global macro developments pertaining to central bank policies, sovereign debt and intermarket dynamics. Ashraf had also served as Chief Strategist at CMC Markets, where he headed a global team of analysts and led seminars and trainings in four continents. His insights on currencies and commodities won him several #1 rankings with FXWeek and Reuters. Prior to CMC Markets, Laidi monitored the performance of a multi-FX portfolio at the United Nations, assessed sovereign and project investment risk with Hagler Bailly and the World Bank, and analyzed emerging market bonds at Reuters. Laidi also created the first 24-hour currency web site for traders and researchers alike on the eve of the creation of the euro. Laidi's analysis of currency markets stand out based on his distinct style in bridging the fundamental and technical aspects of the markets. Laidi regularly appears on CNBC TV (US, Europe, Arabia and Asia/Pacific), Bloomberg TV (US, Asia/Pacific, France and Spain), BNN, PBSs Nightly Business Report, and BBC. His insights also appear in the Financial Times, the Wall Street Journal and Barrons. He has given numerous interviews and lectures in Arabic, French, and to audiences spanning from Canada, Central America and Asia/Pacific.

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