Good morning and welcome to episode 721 of ‘Talking Bull’. In this video/podcast we cover the main headlines and what to expect from the day ahead.
We take a technical look at key markets that are likely to be impacted by today’s events. Also, we participate in a ‘Gun to the head’ challenge where each of us calls a live trade. These will expire at 9pm tonight and we will keep track of the progress over time.
We hope you enjoy it!
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Steve made 2.5R on Bitcoin,
We have included an illustration based on a £1000 account. This will follow the combined return of our morning trades by risking 1% of the trading capital per trade. The 1% risk is a variable monetary amount and will rise and fall based on the success of the calls.
We are currently up 178.63% collectively since we began recording Talking Bull on the 30th October 2019.
BoE increases rates to 3.00%
The Bank of England increased interest rates by 75 basis points to 3.00% at the latest policy meeting which was in line with expectations. To members voted against the decision with Dhingra voting for a 50 basis-point hike while Tenreyro wanted a 25 basis-point hike.
The two dissenters were concerned that the economy was already weakening and were concerned over the risk of tightening too aggressively given the lags associated with monetary policy.
Dovish guidance from Bailey
The bank warned that the economy was likely to be in recession for two years, although the more pessimistic forecasts were based on market rate pricing and these expectations have already declined since the report was prepared.
The bank again pushed back against market expectations with comments that it did expect rates to increase further, but not too levels implied by markets. Bank Governor Bailey stated that he would make no forecasts, but hinted that rate increases were likely to be capped around 4.0%.
Sterling under pressure
Sterling dipped sharply after the Bank of England decision and press conference with dovish guidance from Governor Bailey undermining the currency, especially with fragile risk conditions also contributing to selling pressure.
Mixed US ISM data, employment dips
The ISM non-manufacturing index declined to 54.4 for October from 56.7 previously and below expectations of 55.5. There was a significant slowdown in business activity and new orders growth for the month with a small increase in order backlogs. There was a sharp decline in exports orders into contraction territory.
The employment index dipped into contraction territory for the month while there was a small acceleration in inflation pressures for the month.
Dollar retreats from intra-day highs
The dollar posted further strong gains on Thursday as the hawkish Fed policy continued to boost demand for the US currency with the currency index at 2-week highs.
A recovery in Asian equities helped trigger a tentative dollar retreat on Friday.
US Jobs data Friday
The latest US employment will be released on Friday with consensus forecasts for an increase in non-farm payrolls of around 200,000 with the unemployment rate edging higher to 3.6%.
Average earnings are forecast to increase 0.3% on the month. The data will need to be very weak to trigger a shift in Fed expectations.
Swiss inflation retreats
Swiss consumer prices increased 0.1% for October, slightly below expectations of 0.2% with the year-on-year rate retreating to 3.0% from 3.3% and below market expectations of 3.3%. The lower than expected inflation rate triggered some speculation that the National Bank would be able to avoid further monetary tightening and the franc lost ground.
Norges Bank hikes 25 basis points
The Norges Bank increased interest rates by 25 basis points to 2.50% at the latest policy meeting. Investment banks were evenly split between the potential for a 25-50 basis-point rate hike. Rates are expected to be increased again in December.
12.30: US employment report
12.30: Canada employment report
Key events over the next week
November 10th: US consumer prices
Gun to head challenge – Update
Today’s trade idea
Have a great week everyone.