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Nov 3rd, 2017: Pound Sinks on Dovish Rate Hike

Morning Report: 07.00 London

The British pound is subdued this morning despite the MPC increasing rates by 0.25% to 0.50%. The pound’s slump came because traders had started to price in more rate hikes than now seem apparent. Analysts now expect just two rate hikes before 2020. The EUR/GBP is now up nearly 1% for the week.

The Australian dollar is retreating this morning, with the AUD/USD undoing all of yesterday’s gains. Australian retail sales dropped below expectations yesterday.

The NZD/USD is continuing to climb by contrast.

The euro is performing well, building on yesterday’s gains. This comes despite the US dollar index rising slightly this morning.

The yen pairs have a positive bias, with the USD/JPY remaining at the highs.

Coming up today

Coming up today, we have UK services PMI at 09.30.

At 12.30, we have US Non Farm Employment change, released alongside the unemployment rate and average hourly earnings.

Canadian employment data is released at the same time.

At 14.00, we get US ISM non-manufacturing PMI, released alongside US factory orders.

FOMC member Kashkari speaks at 16.15.

Trade Idea

The US dollar index is continuing to climb, which makes bearish bets on dollar pairs still attractive.

With the AUD/USD under renewed pressure this morning, making a LOWER trade attractive.

Nov 3rd, 2017: Pound Sinks on Dovish Rate Hike

A good way to play this is a LOWER trade predicting that the AUD/USD will close below 0.7650 in 21 days for a potential return of 122%.

Nov 3rd, 2017: Pound Sinks on Dovish Rate Hike