BoE remain optimistic

Yesterday’s markets

15th January 2016

  • EUR Eurogroup Meetings
  • GBP MPC Official Bank Rate Votes: 1-0-8
  • GBP Monetary Policy Summary
  • GBP Official Bank Rate: 0.50%
  • GBP Asset Purchase Facility: 375B 
  • GBP MPC Asset Purchase Facility Votes: 0-0-9
  • ECB Monetary Policy Meeting Accounts
  • USD Unemployment Claims: 284K
  • USD Import Prices m/m: -1.2%
  • FOMC Member Bullard Speaks

Yesterday’s focus was on the Bank of England rate decision and vote that followed. In the earlier part of 2015 the debate was whom will raise interest rates first; the BoE or the Fed, now as the year has gone on the divergence between the two has shifted dramatically, with the US forecast to raise rates potentially four times this year and the UK yet to initiate lift off. Yesterday markets expected a dovish tone to the BoE, with talk of a unanimous 9-0 to keep rates on hold. However, this was not the case, as the vote remained 8-1, with Ian McCafferty voting for a rate hike despite the decline in oil and recent poor economic performance of the UK. The BoE went onto say that growth and inflation are weaker in the near term, pay growth has been restricted and the recent volatility underlines the downside risks to global growth. As a result Sterling appreciated after the release of this announcement.

The Euro rose for its second consecutive day after the ECB signalled that there may be limited action in terms of QE for the near future. The ECB said that many officials remain sceptical for the need of further policy action, strengthening the single currency against all of its major counterparts yesterday morning.

Today’s markets

14th January 2016

  • GBP BOE Credit Conditions Survey
  • EUR ECOFIN Meetings
  • USD Core Retail Sales m/m
  • USD PPI m/m
  • USD Retail Sales m/m
  • USD Core PPI m/m
  • USD Empire State Manufacturing Index
  • USD FOMC Member Dudley Speaks
  • USD Capacity Utilization Rate
  • USD Industrial Production m/m
  • USD Prelim UoM Consumer Sentiment 

Following on from last week’s positive Non-Farm Payrolls, the Dollar bulls will be keen to see if we will we see a continuation from the last week’s employment data. The Retail Sales number will be a key sign of sentiment and confidence towards the latest rate and those pending this year. Also on the docket to note is the Empire Manufacturing.