On the path to tightening

Today's news headlines: 

‘BoE sees tight labour market as trigger for higher rates’. Yesterday, the Bank of England’s Monetary Policy Committee ditched its Coronavirus policy guidance, indicating that a tightening of policy could be in the offing. Previous guidance stated that ‘until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2.0% inflation target sustainably’, the BoE would not consider tightening. However, with inflation having reached 2.5% in June, the MPC thinks it could rise to 4.0% later this year. The BoE will now adopt a wait-and-see approach, only using policy changes when necessary to keep inflation under control. (Financial Times)

‘US considers requiring foreign visitors to be "fully vaccinated’".The Biden administration is considering a change in policy after a jump in hospitalisations for unvaccinated Americans caused by the spread of the Delta variant. This could open the door to visitors from Europe’s Schengen area, the UK and Ireland, as well as China, Brazil, South Africa, and India. The US has failed to hit many of its recent vaccination targets through American’s reluctance to receive the jab, but foreign leaders have called for Biden to lift restrictions, allowing the resumption of international travel. (Financial Times)


Asian stocks mostly fell overnight as traders weighed a record close on Wall Street with an increased spread of the Delta variant. All eyes now shift to today’s US Non-Farm Payrolls release, which could impact the recent equity rally if participants bring forward predictions of the Federal Reserve tightening monetary policy sooner than expected.


German Industrial Production m/m: -1.3% vs -0.8% previously
MPC member Broadbent speaks: 12.15pm
US Non-Farm Employment Change: 1.30pm
US Unemployment Rate: 1.30pm
US Average Hourly Earnings: 1.30pm
Canada Employment Change: 1.30pm
Canada Unemployment Rate: 1.30pm
Canada Ivey PMI: 3.00pm

Interbank rates:

GBPUSD: 1.3925
GBPEUR: 1.1770
EURUSD: 1.1825
USDCAD: 1.2500

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