Dovish 'super Thursday' pushes back rate hike expectations

The Bank of England’s new and improved policy process was unveiled last week as we gained a flourish of tier one data, including the BoE inflation report, MPC minutes and a Mark Carney press conference.

Bank of England officials are at odds over when to raise interest rates after one member of the committee voted for an immediate rate hike today, less than expected. The UK economy continues to gain strength, leading markets to believe that Thursday’s minutes would show a 7-2 vote to keep rates on hold, this was not the case and an 8-1 vote was announced, sending Sterling tumbling against its major counterparties today. In terms of inflation, Mark Carney predicted a bout of “muted” inflation in the UK after all but one of the BoE policy makers decided that price pressures are too weak to raise interest rates for now.

Non-farm payrolls were released last Friday. Employers added 215k jobs in July and the unemployment rate held at a seven year low of 5.3%, adding to signs that the US labour market is improving and twisting the Fed’s arm for a September rate rise. However, the figure narrowly failed to meet expectations of 225k but posted another reading north of 200k leading to a short burst in Dollar strength Friday afternoon.

Monday 10th August 2015

The week starts off relatively quiet with only two pieces of high tier data releases. Inflation data from China released Sunday night/Monday morning will be heavily scrutinised after the current poor form of the world’s second largest economy. Monday evening, we have Dennis Lockhart addressing the market, any clues regarding the Federal Reserve’s rate rise plans will inject volatility into the Greenback.

  • Chinese CPI
  • FOMC Member Lockhart Speaks

Tuesday 11th August 2015

German optimism had faded in July, with German economic sentiment depreciating to an eight month low. The figure has actually been deteriorating since March this year as the knock-on effects of a potential Greek exit cause disharmony in the Eurozone’s powerhouse. Today’s figure however is expected to show a slight uptick to 31 from 29.7.

  • German ZEW Economic Sentiment

Wednesday 12th August 2015

After last week’s surprisingly dovish ‘super Thursday’, the market pushed back expectations for a Bank of England rate rise, with the consensus now for the end of Q1 2016. Wednesday’s raft of high tier labour data if bullish could put an earlier than forecast rate hike back on the table. In the afternoon, the US release a piece of key labour data of their own, in the form of the JOLTS job openings.

  • UK Average Earnings Index
  • UK Claimant Count Change
  • UK Unemployment Rate
  • US JOLTS Job Openings

Thursday 13th August 2015

The pace of growth in the US’s tertiary sector is pivotal in terms of overall GDP, as services account for roughly 70% in the world’s largest economy. June’s figure was surprisingly weak (-0.3%). This month’s number is forecast to rebound to a healthy 0.5%, keeping this year’s rate rise hopes alive.

  • US Retail Sales
  • US Unemployment Claims

Friday 14th August 2015

Eurozone GDP and the inflation figure will be closely watched Friday morning. The data from the Eurozone is not expected to paint a very rosy picture of the region, with consumer prices forecast to fall 0.6% after an anaemic June. In the afternoon, the US release the producer price index and University of Michigan Consumer Sentiment.

  • Eurozone GDP
  • Eurozone CPI
  • US PPI
  • US University of Michigan Consumer Sentiment