Hawkish Haldane boosts Sterling

Yesterday’s markets

22nd June 2017

  • USD - Crude Oil Inventories: -2.5M
  • NZD - Official Cash Rate: 1.75%
  • NZD - RBNZ Rate Statement

Sterling bounced back from two month lows yesterday afternoon after the Bank of England chief economist, Andy Haldane, announced he was considering voting for a rate increase very soon. This sent shock waves through the markets as the usually dovish Haldane, now seems set to join the previous dissenters for the second half of the year. Such a decision is believed to be influenced by the increasing risk associated with waiting too long to tighten policy. This contradicts the view of Mark Carney who on Tuesday said ‘now is not yet the time’ for rate rises.

Yesterday Queen Elizabeth II addressed the nation in her Queen’s Speech. The speech outlined eight key bills which will feature as the main Brexit initiative for the next two years and which the House of Commons will be focused on pushing forward. Repeal, customs, trade, fisheries, agriculture, nuclear safe guards and international sanctions bills were all mentioned. The Queen also mentioned the governments agenda to “secure the best possible deal as the country leaves the EU”. The UK is seeking a “deep and special relationship” with EU allies, to ensure that all parties involved can operate effectively after Brexit. Reference was made to the King of Spain’s visit to the UK, however, the Queen did not mention Trumps planned trip to the UK, surprisingly.

Today’s markets

21st June 2017

  • CAD - Core Retail Sales m/m
  • USD - Unemployment Claims
  • EUR - Consumer Confidence

Today’s economic docket is relatively light. However, markets will continue to digest yesterday’s Queen speech and the surprisingly hawkish comments from BoE member Haldane.

In terms of data, the States are to release two pieces of high tier data today. Firstly, we gain an insight into the health of the US labour market, as unemployment claims are scheduled. Jobless claims are forecast to tick slightly higher than the previous reading to 241k. Later in the afternoon, Federal Reserve Governor, Jerome Powell, addresses the market. Anything untoward said by Powell or any mention of the Fed’s interest rate plans will no doubt inject volatility into the Greenback.