Pounds To Dollars - Daily Candle Chart 17th February 2009

Pounds To Dollars - Daily Candle Chart 17th February 2009

With the markets closed yesterday, the small up candle provided little in the way of trading signals for today. Once again the closing price for the pounds to dollars pair finished below all three moving averages suggesting that the next few days will see a bearish move lower. To add some weight to this view, the opening yesterday was gapped down following the G7 meeting in Rome. We will have to wait and see what happens today, but if you are trading intra day today, I would suggest small short positions with a stop loss above 1.4550.

The main fundamental data this morning were the CPI numbers released at 9.30, coming in at 3.0% against a forecast of 2.6%, a figure which highlights the change in the price of goods and services purchased by consumers. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate with the data derived from the average price of various goods and services which are sampled and then compared to the previous sampling. The usual effect is that if the numbers are better than expected then this is generally good for the home currency, in this case the UK pound which duly strengthened on the news against the dollar. This afternoon we have the TIC data in the US, and I have covered this in more detail on the euro to dollar daily post.

The short term is bearish, the medium term is bearish and the long term outlook is sideways.