Markets still search for rate hike clues

The Sterling boosted at the end of last week after some hawkish comments from the Bank of England, indicating a rate hike might take place in the coming months. After the meeting, one of dovish members of the Monetary Policy Committee, Gertjan Vlieghe, indicated the BOE are close to the point in which they will need to start raising rates. Vlieghe indicated that he would support a hike in the near future, the reasoning behind his change in stance being the lowest unemployment rate in more than four decades and signs of stronger consumptions and wages. Cable rose to the highest level since after the Brexit referendum. BOE Governor, Mark Carney, is set to speak at the Central Banking Lecture in Washington today and the markets will be watching for any comments which indicate his thoughts towards a rate hike in the near future.

Across the pond, the US release the Retail Sales and Core Retail Sales figures, both posting worse than expected at -0.2% and 0.2%, retrospectively. Sales in restaurants and furniture stores saw an increase, however sales of vehicles dropped, with the sales of cars and light trucks posting the weakest monthly paces since early 2014.  As data is collected on a national scale, it was unable to identify the full effect that Hurricane Harvey and Hurricane Irma had on this figure. However, it was noted data collection lagged in the affected areas.


There is a quiet start to the week, with no high tier data releases. The Eurozone will release the final CPI figure this morning, expected to post 1.5%. As this is the second release of this figure, it is likely to have less impact on the market, unless it massively differs from the forecasted. This afternoon, Bank of England Governor, Mark Carney, will be speaking at the Central Banking Lecture, hosted by the International Monetary Fund in Washington.


Tuesday will begin with the release of the Monetary Policy meeting minutes from the Reserve Bank of Australia. From the Eurozone, Germany will release the ZEW Economic sentiment. Across the pond, the Building Permits figure from the US will be released, expected to post an annualised figure 1.22m for August. The Building Permits figure is an indication as to the state of the US economy.


The markets will be watching the Fed on Wednesday, with the release of the FOMC statement and Interest Rate decision, followed by a Press Conference. It is expected Janet Yellen will announce the reducing of its $4.5 trillion balance sheet. The markets will be waiting to hear of any hints that indicate whether the Fed still see another interest rate hike on the cards this year. The markets will be looking for any indication that the Fed see the stronger than expected inflation data continuing, justifying another hike. Back in the UK, the Retails Sales figure will be released, expected to post a slightly lower 0.2%. The day will end with the release of the New Zealand GDP figure.


In Australia, RBA Governor, Philip Lowe, is set to deliver a speech titled ‘the next chapter’ at the American Chamber of Commerce in the Australian business briefing. Across the pond, the Weekly Unemployment Claims will be released from the US as well as the Philly Fed Manufacturing Index. In the Eurozone, ECB president, Mario Draghi, will be delivering the opening remarks at the European Systemic Risk Board.


On Friday morning, the Eurozone will release the Flash Manufacturing and Services PMI as well as the individual readings from two of the Eurozone zone’s largest economies; France and Germany. ECB President Mario Draghi will also be speaking at Trinity College in Dublin. In the afternoon, the focus will switch to Canada with the release of the CPI and Core Retail Sales figures. In the BOC meeting at the beginning of the month, they hinted about further hikes if the economy remained strong, so the markets will be closely watching the release of these figures. The US will be releasing their Flash Manufacturing and Services PMI’s, expected to post 53.1 and 55.9. In New Zealand, votes will be electing the 52nd Parliament.