Trump unexpectedly sacks FBI Director

Yesterday’s markets

11th May 2017

  • EUR - ECB President Draghi Speaks
  • USD - Crude Oil Inventories:-5.2M
  • NZD - Official Cash Rate: 1.75%

President Donald Trump dominated headlines once more yesterday as he abruptly fired his FBI director James Comey. The move has led to increased scrutiny from the Democrats and even some Republicans of alleged ties between Trumps campaign and Russia, as Comey was leading the investigation. The unexpected sacking has been criticised by the Senate Intelligence Committee Chairman, Richard Burr who said he was “troubled by the timing and reasoning of the termination”.

Continuing with the US, Fed member Robert Kaplan said ‘inflation pressures were muted’ and the US rate hikes should be gradual and patient as wages and prices are rising much slower than expected in an economy with close, to almost full, employment. With rates expected to rise two more times this year, Kaplan insisted the Fed would continue to monitor the economic activity. We have two more Fed speakers scheduled this week, William Dudley this afternoon and Charles Evans on Friday. Any further mention of the Federal Reserve’s interest plans could inject further volatility into the Greenback this week.

Today’s markets

10th May 2017

  • GBP - Manufacturing Production m/m: 0.6%
  • GBP - BOE Inflation Report
  • USD - PPI m/m

It is Super Thursday today as not only do the Bank of England release their rate decision but their quarterly inflation report as well. Markets expect rates to remain on hold, with some economists believing they will keep rates on sticky until after the UK leaves the EU.  However, the focus will be on the voting pattern. The forecast for the vote is expected at 8-1 as per last month, however if we see 7-2 or more supporting the rise of rates, we will no doubt see the Pound strengthen and push over a key psychological level.

This afternoon we could also see the BOE revise and higher their inflation outlook for the year. After inflation, this year ticked over the BoE’s target of 2%, at 2.3%, the highest it has been since October 2013. With this said, any surprises look unlikely due to the snap election in June.