UK job market VS the Bank of England 🤺

It’s hump day b*tches! Let’s get through the rest of this week without emptying our accounts shall we? 👀

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UK Job Market Battles The BoE 🤺

Big win for the UK job market. 🏆

As if 13,600 people coming off jobless benefits wasn’t impressive enough, the unemployment rate also dropped to 3.8% beating the consensus of 4.0%.

How did this happen?

Businesses couldn’t find anyone who wanted to work so they had to bring wages up to get people through the door.

Even people who were unemployed and looking for work wouldn’t budge before the raise because why work for sh*tty pay when you can stay at home claiming government funds? 🤷‍♀️

The number of people working has even passed pre-pandemic levels!

Now I know the Bank of England is SWEATING. They’re out here trying to slow the economy down to lower inflation and y’all are making them work for it.

Forget a 25 basis point increase, these numbers might bring 50 point increase talk to the table. 👀

US Inflation Takes A Dip 👇🏼

America! Y’all feeling any relief yet? 😅

Inflation is finally going down. Yesterday’s numbers showed a dropped from 4.9% to 4.0% annually - the lowest rate it’s been in years!

Core inflation (which excludes food and energy) is still a bit high but on the decline too; from 5.5% to 5.3%.

Looks like US gas prices won’t always be as high as Snoop Dogg.

This news could not come at a better time with the Fed making their interest rate decision today - maybe all of these rumours about a pause in rate hikes won’t be bullsh*t after all. 👀

Thursday News

Whether you’re an early riser or a night owl, there will be some news to catch tomorrow. 🌞🌝

Here’s what you’re in for:
(All times in EST)

• 08:15 — Time For The ECB To Make Some Big Moves 👀

  • Event: ECB Monetary Policy Decision Statement, ECB Rate On Deposit Facility, and ECB Rate On Main Refinancing Operations

  • Major pairs to watch: EURUSD

• 08:30 — Are Americans Shopping Or Not? Make up your mind!

  • Event: US Retail Sales (MoM)(May)

  • Major pairs to watch: USDCAD

• 23:00 — Japan’s Negative Interest Rate: Is spending money the answer? 👀

  • Event: BoJ Interest Rate Decision

  • Major pairs to watch: USDJPY

Time For The ECB To Make Some Big Moves 👀

The ECB has some big decisions to make tomorrow.

What monetary policy will they put in place to get inflation down from the current 8.1% to the 2% target?

These policies will affect how much money people can loan from the bank and how much those loans cost them. 💰

One of these policies is the 'Main Refinancing Operations' (or MRO) rate.

Yeah, yeah, I know. Wtf is that, right? 🤨

When commercial banks need to borrow cash from the European Central Bank (ECB), they pay interest on that loan. This is the MRO rate. This occurs on a weekly basis.

When they do borrow from the central bank, they have to give them collateral so the ECB knows they’ll pay back.

Kind of like if you borrow a $100 from your friend and they make you give them your watch until you return the money. No money returned = they keep the watch.

The consensus for MRO?

An increase to 4%.

Expect EURUSD ↑

The other policy is the 'Deposit Facility' rate.

When commercial banks deposit money back into the ECB overnight, this interest rate will determine how much extra cash the ECB will give them for doing so.

Think of it this way:

Have you ever gone on a trip and needed to take out some foreign cash from your local bank? 🏝

Then you go on the trip and come home and you realize that you still have some of that cash leftover. The bank will buy it back from you at some exchange rate. 🤝

You might give them $100 in foreign cash and they give you back $120 in your local currency. Same kind of thing happening here.

The consensus for the deposit facility rate is an increase to 3.5%. Expect EURUSD ↑

Keep in mind that later in the day at 08:45 AM EST they’re going to have a press conference to chat about their decisions. This should have an affect on the market as well. 👀

Are Americans Shopping Or Not? Make up your mind! 🛍

You know how owls do this when they ‘hoot’?

That’s kind of what US retail sales are doing every month. Up and down, up and down, up and down.

January 👆🏼2.8%
February 👇🏼 0.7%
March 👇🏼 0.7%
April 👆🏼0.4%

The consensus for May?

Back down 0.1%.

Expect USDCAD ↓

April gave the United States higher prices, higher interest rates, and less jobs. What can you expect?

Less spending that’s what. 🙅🏻‍♀️🛍

Japan’s Negative Interest Rate: Is spending money the answer? 👀

Japan seems to be facing a different issue than the rest of us.

The Bank of Japan (BoJ) is going to deliver their interest rate decision tomorrow and apparently, they don’t plan on changing their course at all.

The rate is expected to remain super low at -0.1%.

Expect USDJPY ↑

Yes, that’s right. They have a negative interest rate. 🤯

How does that work?

The BoJ uses this more unusual policy to get things moving as they see signs of their currency losing value. 📉

You know how you earn interest on the extra cash you have in the bank?

Well, a negative interest rate works the opposite way. 🔄

If commercial banks are holding any extra funds in their Bank of Japan accounts, they are actually charged interest on it.

It encourages people to spend money instead of holding onto it and therefor boosts the economy. 💰

Technical Tip

Want to easily filter out weak trends?

Plot the 50 EMA on the 4H chart on TradingView and look for areas where the line is moving through the candlesticks.

Avoid these areas, as the trend is weak here.