The Pound takes advantage of USD Sell-Off

inspector_monkfish

17:02 31Jul09 GBP/USD: Cable the Beneficiary of the Dollar"s Sell-Off

Boston, July 31st.

The dust has settled following the GDP report this morning and in the end traders have decided to sell-off the USD. There were some early cracks, but the greenback has finally started taking a good pummeling all around now. This isn"t your normal risk-related trade, though. Treasuries have been bought aggressively during this USD drop and stocks haven"t moved from their intraday range at all.

The way gold and oil have rallied back strongly from an early slip points
strongly to this being very much a USD sell-off. The potential for additional spending where the Cash for Clunkers program is concerned is weighing here.

Cable is taking good advantage of that, getting through and clear of the recent range highs. And it"s used a turn down in EUR/GBP to help accelerate the gains. That"s another indication this is about the USD, not about risk tolerance as otherwise we"d expect the cross to perform well. That being the case, we suspect that with London now heading into the weekend the base USD selling will probably back off. We"ll have to keep an eye on what stocks and bonds do, though.

If equities begin to rally we"ll probably see more USD selling, but of a
different type and with less vigor. A drop in stocks from here, though, would probably see cable retrace back a bit.

Thrugelmir

inspector_monkfish wrote: »

17:02 31Jul09 GBP/USD: Cable the Beneficiary of the Dollar"s Sell-Off

Boston, July 31st.

The dust has settled following the GDP report this morning and in the end traders have decided to sell-off the USD. There were some early cracks, but the greenback has finally started taking a good pummeling all around now. This isn"t your normal risk-related trade, though. Treasuries have been bought aggressively during this USD drop and stocks haven"t moved from their intraday range at all.

The way gold and oil have rallied back strongly from an early slip points
strongly to this being very much a USD sell-off. The potential for additional spending where the Cash for Clunkers program is concerned is weighing here.

Cable is taking good advantage of that, getting through and clear of the recent range highs. And it"s used a turn down in EUR/GBP to help accelerate the gains. That"s another indication this is about the USD, not about risk tolerance as otherwise we"d expect the cross to perform well. That being the case, we suspect that with London now heading into the weekend the base USD selling will probably back off. We"ll have to keep an eye on what stocks and bonds do, though.

If equities begin to rally we"ll probably see more USD selling, but of a
different type and with less vigor. A drop in stocks from here, though, would probably see cable retrace back a bit.

Little changed on a months view - end of June to end of July.

Need to buy USD so hopefully we bounce uptowards $1.80 soon.

Rochdale_Pioneers

As Brown personally crashed the pound last year, I take it that he is personally reinflating it and can expect plaudits from our resident frothers?

Thrugelmir

Rochdale_Pioneers wrote: »

As Brown personally crashed the pound last year, I take it that he is personally reinflating it and can expect plaudits from our resident frothers?

I think the effect of Obamonics are beginning to show. The rabbit has disappeared back into the hat and can't be found.

SilverStandard

inspector_monkfish wrote: »

17:02 31Jul09 GBP/USD: Cable the Beneficiary of the Dollar"s Sell-Off

Boston, July 31st.

The dust has settled following the GDP report this morning and in the end traders have decided to sell-off the USD. There were some early cracks, but the greenback has finally started taking a good pummeling all around now. This isn"t your normal risk-related trade, though. Treasuries have been bought aggressively during this USD drop and stocks haven"t moved from their intraday range at all.

The way gold and oil have rallied back strongly from an early slip points
strongly to this being very much a USD sell-off. The potential for additional spending where the Cash for Clunkers program is concerned is weighing here.

Cable is taking good advantage of that, getting through and clear of the recent range highs. And it"s used a turn down in EUR/GBP to help accelerate the gains. That"s another indication this is about the USD, not about risk tolerance as otherwise we"d expect the cross to perform well. That being the case, we suspect that with London now heading into the weekend the base USD selling will probably back off. We"ll have to keep an eye on what stocks and bonds do, though.

If equities begin to rally we"ll probably see more USD selling, but of a
different type and with less vigor. A drop in stocks from here, though, would probably see cable retrace back a bit.

So whats the future of the pound?