Thought it about time we had a separate thread for currency plays.

Charts Currently Removed - New Ones To Follow Soon

Good Reading If You Like FX
http://www.mizuhobank.com/fin_info/exchange.html

June 3 (Reuters) - Sterling held steady against the dollar and fell against the euro on Tuesday, absorbing surprisingly soft UK construction data but squeezed after weak euro zone inflation triggered a bounce in the shared currency. In late trade in London the euro was up 0.3 percent on the day at 81.40 pence EURGBP= and the pound was unchanged on the day against the dollar at $1.6745 GBP= . Inflation across the 18-nation euro zone slipped to just 0.5 percent in May, increasing the likelihood of easing measures from the European Central Bank later this week and highlighting the contrast with the Bank of England, which is expected to start raising interest rates within a year. ID:nL6N0OK1ES But although below consensus, the decline wasn't a major shock after German inflation figures on Monday came in well below analysts' forecasts. Relieved that inflation wasn't even lower, traders bought the euro back and sterling suffered. "There wasn't any additional 'fear factor' introduced and there was no real surprise, given the German numbers yesterday," said Daragh Maher, senior FX strategist at HSBC in London. "The market was running short of euros, so we have squeezed higher. Also, there's a lot already in the price for sterling in terms of interest rate hike expectations," he said. Financial markets expect the BoE to begin raising rates some time in the early months of next year, in stark contrast to the ECB which will still be in easing mode, and probably at least a few months ahead of the U.S. Federal Reserve. But nascent signs of the UK housing market cooling off have tempered some of the more aggressive bets on the timing of the first rate hike, the latest being a survey on Tuesday showing that the construction sector grew in May at its slowest pace in seven months. The Markit/CIPS UK Construction Purchasing Managers' Index (PMI) eased to 60.0 last month, below the 60.8 expected in a Reuters poll but still far above the 50 line that divides growth from contraction. ID:nL9N0MI020 Sterling had run up to a 5-1/2 year peak against the dollar earlier in May. Over the last year the pound has appreciated some 10 percent against a basket of currencies on the growing assumption that the improving economy and red-hot housing market will force the BoE to raise rates faster than its major peers. "The Bank will be tightening when the ECB is loosening ... but there's a somewhat dovish adjustment of UK rate expectations underway recently," HSBC's Maher said.

LONDON, June 4 (Reuters) - Sterling hit a new high for the day against the euro and pared losses against a buoyant dollar on Wednesday after UK services sector activity expanded at a faster than expected pace in May. ID:nL9N0O202G The pound climbed to $1.6730 GBP=D4 after the data from around $1.6705 beforehand, but was still down 0.15 percent on the day. The euro lost ground, hitting a low of 81.355 pence EURGBP=D4 after the survey was released, from around 81.48 pence beforehand. Financial markets expect the Bank of England to begin raising rates early next year, in stark contrast to the European Central Bank which will still be in easing mode, and probably at least a few months ahead of the U.S. Federal Reserve.

GBP/JPY 171.685 have gone short.

LONDON, June 6 (Reuters) - European stocks rose and bond yields tumbled on Friday in markets buoyed by the European Central Bank's promise of another tidal wave of deflation-dousing cash, but impending U.S. jobs data kept investors cautious. Benchmark 10-year government borrowing costs for Italy, Spain and Ireland all plunged to record lows, with the Irish yield 11 basis points below comparable U.S. borrowing costs. Stock markets rose too, with bank shares leading the way and putting the pan-European index of Europe's leading 300 shares on track for its eighth consecutive weekly gain. U.S. stock index futures SPc1 pointed to a higher open on Wall Street after May's non-farm payrolls report due at 1230 GMT. ECON There was less movement in currency markets, which swung violently on Thursday after the ECB cut interest rates - including taking deposit rates for banks below zero - and pledged hundreds of billions more euros of cheap funds for banks. ID:nL6N0OM3BH "The ECB decisions were largely in line with what the market was expecting. However, the negative deposit rate is certainly a brave move and hinting that QE (quantitative easing) is a possibility if necessary should be very welcome news," said Mark Ward, head of execution trading at Sanlam Securities. The ECB refrained from following the U.S., Japanese and British central banks in pursuing outright bond-buying. But its president, Mario Draghi, did not rule it out in the future, saying, "We aren't finished here". At 1115 GMT the FTSEurofirst 300 .FTEU3 share index was up 0.4 percent at 1,385 points, with financials up 1.0 percent .SX7P . Germany's DAX .GDAXI rose 0.3 percent to 9,981 points. On Thursday, it broke above 10,000 points for the first time. Britain's FTSE 100 .FTSE was up 0.4 percent at 6,840 points, and France's CAC 40 .FCHI up 0.5 percent at 4,560 points. U.S. JOBS UP NEXT Investors' appetite for risky assets and higher returns was most evident in euro zone peripheral bond markets, where buyers pushed yields to their lowest on record. Italian 10-year yields IT10YT=TWEB fell 18 basis points to 2.77 percent, Spanish equivalents ES10YT=TWEB were down 17 bps at 2.66 percent and Irish yields IE10YT=TWEB fell 11 bps to 2.47 percent. "The real consensus coming out of the ECB meeting is that these measures will be supportive of the (European) periphery," said Anton Heese, co-head of European interest rates strategy at Morgan Stanley. "This should be filtering through into lower funding costs in the periphery." The yield on 10-year German bonds, the benchmark for euro zone borrowing, fell 4 bps to 1.32 percent DE10YT=TWEB . Analysts at SocGen said this reflected concerns that the ECB's measures to fend off deflation might not succeed. They also pointed to the euro's sharp rally well above $1.36 EUR= from the four-month low around $1.35 immediately after the ECB statement and Draghi's news conference on Thursday. The euro was down 0.2 percent on the day round $1.3635, with traders saying major moves were unlikely as billions of dollars of options at $1.36 and $1.3650 expire later in the day, and before the U.S. jobs data. The dollar was up a shade against a basket of currencies .DXY at 80.433. Traders hunkered down ahead of the U.S. jobs report, with the median forecast showing the U.S. economy added a solid 218,000 jobs last month, down from 288,000 in April. Estimates range from 110,000 to 325,000. Richard Hunter, head of equities at Hargreaves Lansdown, said the ECB's move could soothe market jitters over a downbeat number. "There's every possibility of a sell-off should the number disappoint, but ... that could yet be short-lived," he said. Earlier in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.25 percent and Japan's Nikkei .N225 closed flat at 15,077. Yields on two-year U.S. Treasury notes were at 0.38 percent US2YT=RR after dipping 2 basis points on Thursday, while those on 10-year paper fell 1.4 bps to 2.57 percent US10YT=RR . Gold steadied at $1,251 XAU= having enjoyed its biggest gain in three weeks overnight as buyers were encouraged by the prospect of yet-lower rates for longer in the euro zone. Brent crude oil LCOc1 nudged higher to just under $109 a barrel.

GBP/JPY short 171.685 closed at 171.889 for -20.4 to free up markin requirement, no further currency positions open.

Mark Carney has warned households, companies and financial markets to prepare for an interest rate rise, saying the first increase “could happen sooner than markets currently expect”. In his first hawkish comments since becoming governor of the Bank of England almost a year ago, Mr Carney stressed on Thursday evening that the widely anticipated action by the central bank this month to cool the housing market will not be a substitute for gradual interest rate rises. Having last year guided people to expect rates to remain at the emergency level of 0.5% until 2016, financial markets currently expect the first rise in spring 2015 and the governor’s Mansion House speech to a City audience is bound to bring expectations further forward, perhaps towards the end of this year – FT.

Noting - Pound starting to slip against a basket of currencies now.

I prefer this one

The pound is still pushing higher, I await the downside.

■Today, Shinzo Abe, Japan’s Prime Minster, unveils his push for changes at the $1.26 trillion Government Pension Investment Fund that could shift hundreds of billions of dollars out of domestic government bonds into equities, overseas assets and alternatives such as infrastructure. The fund is being dubbed ‘the agent of reform’. USD/JPY unchanged.

The third arrow!

So its been dubed, you'd expect it to drive the Nikkei on a nice gradual upwards path if risk is adopted. As for Yen I'd expect this to create some demand for the currency so would think GBP/JPY and USD/JPY would top off, maybe 173 for G/J would make a nice shorting point, I'll wait and see.

With Carney in front of the TSC today also GBP/EUR could well see a fall, rate increases will be slow and steady I think, we're too near to a general election for anything else in my view, GBP/USD & GBP/EUR could both be quick shorters. Eyes down!!

Whilst I have a sec, there we have it, a Hawkish Carney yesterday seeing the pound off highs... I think Euro will now fall to test the 1.22 support level and as such will short GBP/EUR.

Long EUR/GBP 0.80228.

LONDON, June 25 (Reuters) - Sterling inched lower on Wednesday, adding to its biggest fall against the euro in more than a month after the latest salvo from Bank of England policymakers left investors increasingly confused over the outlook for interest rates. With Britain's economy steadily improving, the game on the pound for the past few months has been a to and fro on expectations for when the bank will deliver a first, potentially small and precautionary, rise in interest rates. Money markets suggest many investors expect that to be as early as November. However, a number of analysts and dealers say Governor Mark Carney has muddied the waters after two performances in a week that pushed market expectations on timing first one way then the other. On Tuesday Carney pushed back slightly against expectations the bank will raise rates before the end of this year, saying the economy still has slack to work through. ID:nL6N0P52WP Criticism of the governor by the head of parliament's Treasury committee made the front page of the Financial Times on Wednesday. "Carney did himself no favours at all yesterday. People feel he is flipping and flapping over rates," said one London-based foreign exchange dealer. "As a central banker you should seek to provide clear guidance and a consistent message. This guy is not giving that at the moment. The net effect today anyway is that people are less sure about a rate rise by the end of the year." Sterling was around 0.2 percent lower against both the dollar and the euro on Wednesday. It fell to a one-week low against the dollar of $1.6952 GBP=D4 while the euro rose to 80.315 pence, its highest in nearly two weeks. The outlook for sterling looks positive though compared to the dollar, euro, yen or Swiss franc as markets still expect the BoE will be the first of the four major central banks to raise interest rates. "At the end of the day this is the only central bank currently talking actively about raising interest rates," said Graham Davidson, a currency trader with Australian bank NAB in London. "The market had been very long of sterling before yesterday's comments by Carney and it was only natural that we came off a bit. But I don't see us coming much further." Worries that the UK housing market is again overheating, and will eventually need to be calmed by more than just tighter practical controls on mortgage lending, support the argument for a rate rise before year-end. The BoE's latest financial stability report on Thursday may provide more food for thought on that front.

Carney effect.

Yep, lets see how long it lasts shall we....

LONDON, July 1 (Reuters) - Sterling hit its highest level since the 2008 financial crisis on Tuesday after a survey showed British manufacturing growing at its fastest in seven months, adding to the case for a rise in interest rates this year. The PMI index of sentiment among manufacturing purchasing managers rose to 57.5 in June from 57.0 in May - its highest since November and well above the 50 line that divides growth from contraction. Economists in a Reuters poll had expected the index to fall to 56.8. ECONGB The survey adds to evidence that Britain's consumer-led recovery is becoming more balanced and sustainable. The numbers are likely to reassure policymakers looking for a more broad-based recovery based on greater exports, manufacturing and business investment. ID:nL9N0O500C Sterling rose to $1.7162 GBP=D4 , up around 0.25 percent on the day. In contrast to the UK data, U.S. data disappointed with the Institute for Supply Management's index of national factory activity at 55.3 in June, almost unchanged from May's 55.4 reading. But it was under the 55.8 reading a Reuters poll expected. The euro fell 0.3 percent to 79.765 pence EURGBP=D4 from around 80.05 pence before the UK data. Against a basket of major currencies, sterling hit its highest in nearly six years, rising to 88.6, data from the bank of England showed. =GDP . Some traders said expectations for robust growth and an ensuing Bank of England hike in interest rates for the first time in seven years now looked well priced into sterling. The last month has shown, however, that the currency will still move on changes in expectations on how early that first hike might come. "We're already looking at a decent consensus 3 percent growth for this year," said Simon Smith, head of research at FxPro. "Stronger PMIs will solidify that perception but I don't think they're necessarily going to cause sterling to run away unless we have anything from the central bank that's going to cause markets to believe that things are shifting on that front," he said. BoE policymakers have massaged expectations on the timing of their first move in a series of comments over the past month. The market is divided over whether they could move as early as November this year or wait until well into 2015. Either way, the bank is firmly expected to be the first of the world's major central banks to tighten monetary policy and that has driven a roughly 10 percent gain in the past year. The BoE starts a two-day policy meeting next Wednesday where it is widely expected not to make any changes. On Thursday, the European Central Bank's governing council meets and is expected to keep policy unchanged after lowering rates just last month. "We think sterling has a had a good run, both against the dollar and the euro," said Ian Gunner, portfolio manager at Altana Hard Currency Fund. "Against the dollar, much would depend on how the U.S. payrolls data is on Thursday." Economists polled by Reuters expect 212,000 jobs to have been added in June, for the fifth straight month of gains above 200,000, which is a run unmatched since the period from September 1999 to January 2000. A weaker-than-expected payrolls report could see the U.S. dollar .DXY suffer more. The dollar has shed 0.7 percent against a basket of currencies .DXY in June, on growing expectations that U.S. interest rates will not be heading higher anytime soon.