Trade and Tribulations; BOE Next

The backbone of Trump's electoral promise was a better deal on trade and in the days ahead he faces the first real tests of that part of the agenda. The euro was the top performer Wednesday while the Swiss franc lagged. GBPUSD edged up on higher than expected services PMI. The BoE decision, quarterly Inflation Report and Carney testimony are next. The Premium trades will close the GBPUSD long at 170-pip gain ahead of the BoE and issue a contingent order just before the release momentarily.

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تركيز على الإسترليني و اليورو (فيديو للمشتركين فقط)

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Reports on Wednesday said the White House could take trade actions against China as soon as this week. This action will target intellectual property rights and could mean unilateral duties. Any day, Trump's administration could also launch protectionist measures on steel. Combine that with the scheduled start of NAFTA negotiations next week and the worries begin to pile up.

What's worse is the targets of Trump's ire likely sense weakness in the White House and an opportunity to work with Congress to circumvent the President. Add it all up and it increasingly leaves a razor-thin margin for success with plenty of opportunities to crank up risk aversion or hurt the US dollar.

The momentum against USD continued Wednesday with the euro topping 1.1900 and cable shaking off a poor construction PMI to touch 1.3250.That data point will likely help to keep the BOE on the sidelines Thursday but the market will be closely watching the vote. The big question is whether Andy Haldane join hawks Saunders and McCafferty to vote for a hike and produce another 5-3 surprise. That kind of momentum may force Carney into signalling higher rates in the near term.

Even if the votes don't swing, there  is plenty of scope for a hawkish surprise in the Minutes, GDP revisions, CPI revisions or Carney's speech. Technically, cable continues to chew towards the Sept 2016 high of 1.3444.