Thread: Discuss the GBP/USD with a DailyFX Analyst

Originally Posted by Euchre

My 2 cents (worth less I know with our $ ) says it is Too Easy to simply sell the US$ on the expectation of 25 or 50 bps on the cards come Tuesday. Euro and Cable may be well bid up til then but the one thing Fx does is it doesn't always do what is expected.

This is a point well taken and one that I understand completely. Yet such forecasts and overall market trends will give the trader a clear fundamental bias through medium term trade. I can remember specifically having an argument with a trader over the future direction of the dollar, and he was enthusiastically arguing that the dollar had to go up. Well, I said, no, expectations of falling interest rates will be enough to sink the currency through the medium term.

At the time the dollar index seemed to be basing at the 80.00 mark, which gave him further conviction in calling for a bottom. Combined with the fact that the dollar would routinely rally on equity market tumbles, it seemed that interest rates started to matter less and less.

Yet the recent calm in equity markets has brought interest rates back to the forefront of FX trade, and the dollar has subsequently lost on falling differentials against major counterparts.

Clearly, hindsight is 20/20, but it remains critical to note that such expectations are what drive trends across currency pairs.

Given the Euro at record highs, can the dollar decline more on interest rate expectations? Maybe, but it seems as though markets have largely absorbed expectations of a 50% chance of rates at 4.75 percent through September.

It will be critical to watch where we go from here.

The ratio of long to short positions in the GBPUSD stands at -1.08 as nearly 52% of traders are short. Yesterday, the ratio was at -1.36 as 58% of open positions were short. In detail, long positions are 25.8% higher than yesterday and 1.7% weaker since last week. Short positions are 0.2% lower than yesterday and 15.6% weaker since last week. Open interest is 10.8% stronger than yesterday and 14.3% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD gains.

Originally Posted by Antonio Sousa

The ratio of long to short positions in the GBPUSD stands at -1.08 as nearly 52% of traders are short. Yesterday, the ratio was at -1.36 as 58% of open positions were short. In detail, long positions are 25.8% higher than yesterday and 1.7% weaker since last week. Short positions are 0.2% lower than yesterday and 15.6% weaker since last week. Open interest is 10.8% stronger than yesterday and 14.3% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD gains.

Hi Antonio,
I appreciate your comments on the SSI. Thank you, and please keep it up.

According to a sample of our latest dealing desk statistics, the ratio of long to short positions in the GBPUSD stands at -1.07 as nearly 52% of traders are short. Yesterday, the ratio was at -1.36 as 58% of open positions were short. In detail, long positions are 29.8% higher than yesterday and 1.4% stronger since last week. Short positions are 2.5% higher than yesterday and 13.2% weaker since last week. Open interest is 14.1% stronger than yesterday and 11.9% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD gains.

Hi all,

cable got smashed from 2.0300 to 2.0205 a full 95 pips after rumours circulated and then got confirmed that one of UK's largest mortgage lenders, Northern Rock, ran to the Bank of England, asking for emergency assistance.

Thanks a lot Northern Rock - you spoilt my long in GBP-USD!!

These lenders are a curse! Subprime mess is still spreading around the world.

Thank you "lenders" !!

52% of retail traders are short GBPUSD (long to short ratio is -1.08). However, since last week, retail has been buying the GBPUSD (long positions are up by 7.9%). When retail is short but reduces its exposure, the long term direction remains bullish but the market might have some downside in the short term. The SSI gives us a MEDIUM SIGNAL TO BUY GBPUSD.

Source: FXCM Dealing desk

I'm new here. i want 2 know the importance of Speculative sentiment index and how it can be of help in trading the forex. Thanks.

Originally Posted by economist

Hi all,

cable got smashed from 2.0300 to 2.0205 a full 95 pips after rumours circulated and then got confirmed that one of UK's largest mortgage lenders, Northern Rock, ran to the Bank of England, asking for emergency assistance.

Thanks a lot Northern Rock - you spoilt my long in GBP-USD!!

These lenders are a curse! Subprime mess is still spreading around the world.

Thank you "lenders" !!

It looks like we got a not to happy follow up decline in the pound when capital markets opened up in London. A swift drop in the FTSE (and indeed all across the European bourses) stands in contrast to the Nikkie's strong 1.9 percent rally. I wonder if this will be another one of the 'major' market movers. It's hard to tell though. I guess it really boils down to whether this shows another stage in the spread of lending problems through the global market. Certainly this is not the first step like a hedge fund imploding (like those at Bear Stearns) or a major lender going into bankruptcy (like Countrywide in the US).

Check out this write up from IFR crossing the wires a little while ago:

[07:28 U.K. ECON: Press Awash With Negative Headlines]

London, September 14. The financial markets are understandably sensitive to any fall-out from the U.S sub- prime crisis and news that a the U.K"s leading mortgage lender for the first half of the year has had to arrange an emergency borrowing program with the BoE has badly shaken the sterling market and has had ramifications for the riskier end of the currency market.

While the Northern Rock situation is not good news it does, however, need to be put in context. Northern Rock is in a different position from most of the U.K"s leading lenders. It does not have a sizeable deposit base unlike the bigger banks and building societies and for this reason it is almost solely reliant on borrowing funds from the money markets. With borrowing costs rocketing because of the credit squeeze linked to the sub-prime issue the ability to borrow has been severely impacted. Northern Rock, reportedly, has no exposure to U.S sub-prime but because of its borrowing/lending make up has suffered just the same.

Northern Rock has announced that its decision to rein in its lending and the high costs of borrowing will hurt profits this year and in 2008. However, according to the FSA, the Rock is solvent, exceeds its regulatory capital requirement and has a good quality loan book. It is also worth adding that earlier this week the BoE stressed that it would not bail out insolvent institutions. Clearly this highlights the fact that Northern Rock has had difficulties but the BoE has provided emergency funds but not with an intention to bail out the lender.

Hi, I am a newbie to forex, can someone kindly explain what is long-term, medium-term and short-term in the context of forext trading ?

Thanks

I got bashed yesterday out of my posis as well... I didn't expect UK news like this drop out of nothing at night! When I last checked yesterday, I had a very healthy profit, had 3 posis.

short @2.0166, long @2.0241, long @2.0319. I checked when Cable rallied up to 2.0340 where it stopped abruptly. I was stupid enough not to have proper stops on my longs for overnight --> kicked in the ass hard. I could have made a really nice profit if I quit at top which I was giving some thought but I had greed whispering in my ear... I think I will wait with my next trade until after Fed Tuesday, just to clear my head and calm down.

Originally Posted by shiva

Hi, I am a newbie to forex, can someone kindly explain what is long-term, medium-term and short-term in the context of forext trading ?

Thanks

Sure.

As you might guess, we highly-leveraged forex traders tend to be more short term than more mainstream markets.

By my definitions (and this varies from trader to trader)

Short term: anything under two weeks. Could be as little as little as 2 seconds... still short term.

Medium term: greater than two weeks, less than 3 months

Long term: 3 months and on further

54% of retail traders are long GBPUSD (long to short ratio is 1.16). . Last week, the ratio was at -1.25 as 56% of open positions were shortMoreover, since last week, retail has been aggressively buying GBPUSD (long positions are up by 4.0%). In the past, when retail was long and buying more, the GBPUSD has sold off in the following days. The SSI gives us a STRONG SIGNAL TO SELL GBPUSD.

Source: FXCM Dealing Desk

Hi traders

Today I have a nice BUY signal on Cable. At 9.41 am NYTime, I'm buying at 2.0097. Looking for my daily target. My limit 2.0120 (+20p to each lot). More highs at 2.0150 and 2.0180.

I see oversold levels around today's low 2.0091. And probably another low at 2.0040. My Retro-Signal on GBP are on. Technical Signals: GPB 2.0090 Oversold. MACD -.0003, RSI -43.49, FastS. +18.45, AweS -0.017.

Today Fundamentals may to help me to push down $. Retail S 00.3% vs. 0.5, Core R -0.4% vs. 0.7% (awesome). Current Acc -187B vs.-191B (terrible). By the moment Consumer Sentiment and Business Inventories are pending.

Are someone else on long today?

Took a long at 20270 yesterday and stopped out 20213, at the back of my mind I thought cable might be near its end of bull run and next Tuesday's Fed meeting could be the trigger for a trend change, but it seems "Northen Rock" was the trigger and arrived four days earlier.

Anyway I am short form 20192 and a bit concerned that euro's not dropping hard to add downside momentum to cable.

Originally Posted by shiva

Hi, I am a newbie to forex, can someone kindly explain what is long-term, medium-term and short-term in the context of forext trading ?

Thanks

Ok ST could be 5 min MT 15 min LT an hr or


ST could be an hour MT 4 -6 hrs LT daily or


ST 6 hr MT daily LT weekly

All depends on your risk profile, and your risk mgmt.

Euchre

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