Friday, January 20, 2017

London Home Presales Slump to Four-Year Low


Continued bearish GBP.




12 comments:

Michael Norman said...

Already priced in to GBP.

Footsoldier said...

Now all eyes are on Johnson and Johnson prices rises in Feb and if Carney raises the rate.

If Carney raises the rate on the thinking it will fight inflation. The zombies will push the GBP/USD back over 1.3.

Then when reality kicks in it could easily fall in Parity with the $.

Matt Franko said...

Foot it is relative remember...

What has happened typically in the past is when the US really gets it rolling then the ROW benefits by increasing prices of exports in USD terms and the USD goes down...

If the US situation is strong enough, then the US importers just pay the higher prices and the foreign currencies rally vs. USD...

Fly in the ointment this time is Trump and his policy wrt the trade deficit and tariffs... I'm not 100% on how that is going to change the outcome this time...

If things are really going good here in US, maybe Trump backs off on the CAD as not as important and the typical pattern wrt the USD can develop again... have to see how it goes...

Footsoldier said...

So you think if Carney raises the interest rate. The fall in the £ will be absorbed by the US hiking the rates as well ?

The zombies are defo going to push the GBP/USD up if carney threatens to raise the rate.

Matt Franko said...

Well not to 1.5

Footsoldier said...

It is going to be very interesting to watch as I can't see how he's going to get the US rolling with all those deficit hawks in place.

He's trying to square a circle. I don't see how he can bring all those jobs back and still remain competitive. If these products that used to be made by cheap labour abroad are now going to be made in the US. Then surely the prices of these products are going to rise ?

So then you will have exporters to the US raising their prices and prices rising on those products made in the US ?

How will they do this ? Will they have to supress domestic demand like the Eurozone does ?

If he creates all these jobs he's talking about by bringing the jobs back. Where is he going to get all the skills and resources from to build his infrastructure ?

He's going to run out of people ?

Footsoldier said...

No defo, my guess is they'll push it back above 1.3

Footsoldier said...

Once the zombies push the GBP/USD back above 1.3 on the threat of a rate hike and the fact that the US has already hiked helping that push.

It will be interesting to see where it goes from there. Because it has never shown a true reflection for 6 months now.

We will have in tango the US FED wekening their $ and the UK BOE weaking their £ after Carney hikes.

The only play in my view is to go long GBP/USD if Carney says he's going to hike. Then bail as soon as he does. Because feck knows where it is going to go after that.

I would have thought the £ would drop a lot but like you say maybe not because the FED has also hiked. then see what Trump actually does.

Matt Franko said...

For a sustained rally in GBP conditions have to be favorable for UK firms to often raise prices in foreign currency terms...

Matt Franko said...

Foot,

Also fyi found this, if you see here at this Fidelity site, USTs with terms of 52 weeks or less ALL are sold via discounts not coupons...

https://www.fidelity.com/fixed-income-bonds/individual-bonds/us-treasury-bonds

So any rate hike only 1 year old or less probably not detectable in the Treasury's interest line item in the DTS...

Footsoldier said...

Very interesting Matt.

Footsoldier said...

Very interesting Matt.