ECB & BOE Hikes Interest Rates...

Bank of England gave a surprise hike today with 25 bps bringing the interest rates to 4.75% today. So does the RBA (Reserve Bank Australia) & the ECB (European Central Bank) made the move of 25 bps as well. GBP/USD pair managed to climb and maintain 100 pips higher after the release. However, things are not looking good for the EUR/USD as the pair gave back all the gains made after the interest rate hike. Chances are traders are expecting a stronger than expected NFP report due tomorrow. US Service Industries (ISM Non-Manufacturing Index) expanded at a slower pace in July as orders dropped to the lowest in more than three years and costs climbed. The Institute for Supply Management's index of non- manufacturing businesses including banks, builders and retailers fell to 54.8 from 57 in June. Readings above 50 point to growth, and the index has averaged 57.8 since its inception in 1997. Rising interest rates are weakening the expansion in services, such as real estate, which account for 88 percent of gross domestic product. The figures suggest the Federal Reserve is close to achieving what it set out to do when policy makers began raising rates more than two years ago: cool growth without stalling the economy. New orders at U.S. factories rose a smaller-than-expected 1.2 percent in June as orders outside transportation and defense were weak, a government report showed on Thursday.

Euro start to gain when US Jobless Claims rose 14'000 last week to 315'000, higher than the market expectations of 310'000 and the previous week of 298'000. Soon after that ECB President Jean-Claude Trichet gave mild-hawkish remarks saying that the Eurozone is still very accomodative and future hikes will depend heavily on economic data. This has bring Euro to 1.2833, the high of almost similar for the past 2 days which serves as a big resistance to the pair. I took a trade at 1.2787 for EUR/USD with 1996 units. My analysis on the NFP tomorrow would be another weak number signalling weaker employment growth. Hourly earnings however will mostly maintain of what was reported last month, a number of 0.5% or less. I'm still holding on the this trade I made making a bold judgement that the Federal Reserve will pause next week.