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April 14, 2015

The BOE forecasting model revealed

Filed under: Forex Strategies — Tags: , , — admin @ 4:43 pm

So the big news at the time of writing (9 pm NY time) is an FT story wherein a Greek official says that this time, they are serious about defaulting if the Eurozone doesn’t show them the money.


It’s been what, a good six weeks since the last farce in three acts featuring Greece and the Eurozone; Aristophanes would no doubt be proud.  While this apparently never-ending pas a deux is of course beyond tiresome, given the recent uber-surge in European assets, it’s probably worth taking at least some note.

Indeed, after a number of months of stumbling to get out of their own way, peripheral equities have finally joined the party that the Dax has been enjoying for some time now.   However, when they start handing out “forecaster of the year” awards to Buzz Lightyear when Greece starts to rear its ugly head, and May is just a few weeks away….well discretion would appear to be the better part of valour.

While the euro looks understandably putrid, Macro Man is actually getting more interested in sterling as a potential short candidate.   To be sure, cable has already collapsed from the heady heights of 1.70 in less than a year, and it’s difficult to see another 25 big figure decline over the next 12 months.

That having been said, monetary policy is nonexistent, and even commentary from Carney’s Bank of England seems to derive from a magic 8-ball.

At the same time, it seems rather more likely than not that Mr. Bean Ed Miliband will be the next prime minister, thanks to gerrymandering and a coalition with the SNP.  Things could still change, of course, but it looks to be a very close-run thing, and the uncertainty hardly looks bullish for the currency.   Macro Man isn’t pulling the trigger yet, but if we get a pop in cable back towards 1.50 over the next week or so, it will be hard not to.  Hey, even Mark Carney agrees!


  1. Oh and just through apocryphal stories and my own experience. House prices in the UK are plummeting.
    Down 5- 10% but hasn't it the headlines yet as nothing is selling and hanging on to high valuations – the only stuff going through is now deep discounted.

    I was hoping that Scotland voted No last Sept. Now i really wish they had said yes. This could be the worst possible scenario.

    Oh and it looks as though Captcha has entered a new dimension .. to post this comment I've had to look a selection of food dishes and select those which are a form of soup. wtf? I guess it's google using us slaves to tag the metadata on their image library for them.

    Comment by Polemic — April 14, 2015 @ 5:18 pm

  2. Before you go shorting all global FX, MM, the IMF just downgraded their forecast for the US economy for 2015. (Shocker…) Wot, no escape velocity?

    LB's Dollar Reversal is a 50-1 shot at the MM bookies but she's a canny filly and she is creeping up on the rails with the lead horse in her sights ….

    (Racing analogy was for Amplitude in the House)

    Comment by Leftback — April 14, 2015 @ 5:44 pm

  3. The Greece story continues to turn like ribbons on a Maypole.
    We had the whole Cyprus turmoil but no Cyrexit.
    Why is there so much ink being spilled on Grexit…there's no mechanism for that, what are the chances?

    Here is Yanis V at INET

    You won't hear any mention of Drachmas, did hear some Bob Dylan lyrics though!

    You'll need a hour to watch it all.

    Comment by JohnL — April 14, 2015 @ 6:21 pm

  4. I hear you on the GBP MM. Now, let us assume for a minute that the story about the the combination of ECB QE and a rising external surplus is fuelling global carry trades is true.

    You won't get better MACRO example of this than the EURGBP. Here is a data point for you. The Eurozone is now running a larger bilateral trade surplus with the U.K. than with the U.S.! When the tide goes in, the money will come home to mother Germany!

    Of course I could have just said that I think the EURUSD will fall LESS than GBPUSD ;). But I would not underestimate the counter flow impact of ECB QE if and when the tide turns (even in EURUSD). It will be like USDJPY in the old days ;).

    Comment by CV — April 14, 2015 @ 6:56 pm

  5. I see it took a student of Aristophanes to pick up that CBankers are just running with the present dialectical veneer
    for the sake of speech and the holding of communication ties; as there certainly isn't any desire for any backdoor deals. At the end of this Greek financial crisis we may recognize that this gaggle of officialdom would rather run roughshod over any trading desk they think would rather be best drip feed than think for themselves then having to watch from the sidelines anyone doing it for themselves.

    Comment by amplitudeinthehouse — April 14, 2015 @ 7:24 pm

  6. I don't really get where you are coming from on the UK election. It's been too close to call for a long while now and remains that way. Indeed the latest data I saw gave a hung parliament as the most likely outcome.
    Having said that I suppose whether as you say labour look likely to govern ,or whether we have a hung parliament is academic in terms of Betty. Either outcome won't be supportive.

    Comment by checkmate — April 14, 2015 @ 8:01 pm

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