BoE Minutes Unanimous Policy Decision

The just out BBA data has shown a rise in the number of mortgage approvals for June, casting some apprehensions over the recent measures unveiled by the BoE to tackle the overheating domestic housing sector. Additionally, the BoE minutes revealed that policymakers voted unanimously to keep their current policy stance unchanged. Going forward today, the BoE Governor’s speech will be keenly eyed for further cues on the central bank’s future course of action. In the US, hopes of a significant rebound in the US economy have strengthened following a spate of encouraging economic reports released yesterday. Across Europe, today’s Euro zone consumer confidence report will be eyed, although it is unlikely to show an improvement for July.

Pound Sterling – UK Markets

The Pound has shown subdued reaction against the majors this morning following the release of some crucial domestic economic reports. Data indicated that BBA mortgage approvals in the nation rose for June. Additionally, the BoE minutes showed that policy members voted unanimously to hold the benchmark interest rate near the record low level of 0.5% while keeping asset purchases unchanged at £375 billion. However, the minutes failed to provide any hints on the probable timeline for raising interest rates, although there was a discussion on this issue at the last policy meeting. Going forward today, markets will closely monitor a speech from the BoE Governor, Mark Carney, for further direction on the central bank’s future policy stance, especially after indicating that the central bank’s action would be dependent on the domestic macroeconomic data. The Pound remained in a tight range against the US Dollar while it edged higher against the Euro in yesterday’s trading session. Data from the CBI indicated that total orders at UK firms fell more than expected for July.

US Dollar – US Markets

Data released yesterday indicated that inflation in the world’s largest economy continues to remain above the Fed’s 2% target for June, mainly helped by rising gasoline prices. Additionally, sales of previously owned homes in the US rose for the third consecutive month for June and touched the highest level since October 2013, thereby reversing the recent soft patch of economic data in the US housing sector. Furthermore, the Richmond manufacturing data came above market estimates and was in sync with a slew of regional manufacturing reports released last week. These upbeat regional manufacturing reports has raised hopes of a similar trend in tomorrow’s Markit manufacturing PMI for July. These positive set of economic releases has boosted speculation of a significant rebound in the US economy for the second quarter, leading the US Dollar to nudge higher against the Euro yesterday. With a lack of macro data in the US today, the greenback is trading in a tight range against most of its major peers this morning. Meanwhile, markets will keep a tab on the Euro zone consumer confidence report along with comments from the BoE Governor for further direction.

Euro – European Markets

The Euro fell near to its lowest level in eight months and breached the 1.35 mark against the US Dollar yesterday amid expectations of a sooner than expected hike in interest rates in the US following upbeat economic reports. Data indicated that the US consumer price inflation remained unchanged for June and above the Fed’s 2% target while housing data surprised markets on the upside, thereby supporting the recent notion that the US economy might rebound during the second quarter following a setback witnessed earlier this year. Meanwhile, the Euro is trading in a tight range against the majors this morning. With no major economic releases in the US, the Euro-US Dollar pair is likely to chart movement in accordance with today’s Euro zone consumer confidence report and developments in Ukraine and the Middle East. Furthermore, investors will keep a close watch on tomorrow’s manufacturing and services activity reports from most of the major European economies to gauge whether the unprecedented stimulus measures unveiled by the ECB last month were sufficient enough to boost recovery in the Euro bloc.

Other Currencies – Highlights

Data released earlier today revealed that consumer price inflation in Australia rose for the second quarter, thereby denting hopes of further monetary policy easing and lifting the Australian Dollar above the 0.94 mark against the US Dollar this morning. Yesterday, the Aussie Dollar remained supported following upbeat comments from the RBA Governor, Glenn Stevens. However, gains in the Australian Dollar were capped amid continuing geopolitical concerns in Ukraine and Eastern Europe and following encouraging US inflation and housing data. With no major domestic triggers scheduled this week, markets will keep a close watch on US weekly jobless claims and durable goods orders data to provide further direction to the Australian Dollar. Additionally, tomorrow’s Chinese HSBC manufacturing activity report will keep market participants interested.