Focus on central banks

Today's news headlines: 

‘Jay Powell urges patient approach to rate rises as taper begins’. The Fed has just begun unwinding their stock of asset purchases from the multi-year quantitative easing program, so Jay Powell has made a point to signal a delay to interest rate hikes as the impact of the reversal is measured. (Financial Times)

‘BoE expected to raise rates on Thursday amid rising inflation’. UK overnight index swaps levels imply a strong likelihood among rates markets participants that the Bank of England will raise its benchmark rate at the policy meeting today. Either it will, or the Monetary Policy Committee will push back on the extent of policy tightening currently in the rate levels. (Financial Times)


Today

The US Dollar has bounced back in yesterday’s session, keeping Sterling contained towards the bottom of one-month lows. On the other hand, trade-weighted Euro is buffeting 15-month lows, so that’s the region's true laggard. Oil's two-week pull back from circa $87/barrel is likely to constrain a further US Dollar rally, at least for now. All eyes are on the much-hyped UK rate decision this afternoon.

Events

NZ ANZ Commodity Prices m/m: 2.1% vs 1.5% last month
AU Retail Sales: 1.3% vs 1.3% last month
EU German Factory Orders m/m: 1.3% vs -8.8% last month
EU Spanish Services Purchasing Managers' Index: 56.6 vs 56.9 last month
EU Italian Services PMI: 8:45AM
EU German Services PMI: 8:55AM
EU Final Services PMI:  9:00AM
UK Bank of England Policy Report: 12:00PM
US Unemployment Claims: 12:30PM
EU European Central Bank President Lagarde speaks: 1:00PM
UK Bank of England Governor Bailey speaks: 1:00PM
UK Monetary Policy Committee member Cunliffe speaks: 4:30PM


Interbank rates:

GBP/USD – 1.3630
GBP/EUR – 1.1800
EUR/USD – 1.1545
USD/CAD – 1.2400

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