BoE Minutes Offer No Surprises
Following the latest Quarterly Inflation Report, the minutes of the central bank’s latest policy meeting offered no fresh insight to the central bank’s policy stance. However, two policymakers continued to vote for an immediate rise in Britain’s benchmark interest rate, despite the latest set of economic releases from the UK displaying signs of headwinds for the economy.
Across the Atlantic, focus among traders today is likely to remain on the FOMC minutes, particularly after the central bank wound up its stimulus programme last month and indicated that the slack in the nation’s labour market is diminishing. Additionally, investors will look for hints of concern in the minutes about the recent slowdown in the global economy.
Pound Sterling – UK Markets
The minutes of the BoE’s latest policy meeting revealed that a majority of policymakers voted to keep the central bank’s current accommodative monetary policy unchanged. However, two policymakers continued to dissent and vote for an immediate interest rate rise in the UK. The minutes hinted at buoyancy in business investment and a pickup in wage growth. The Pound has strengthened against its major peers after the release of the minutes. Going forward, market participants will keenly eye today’s FOMC minutes for further direction in the Pound-US Dollar pair.
Sterling lost ground against the Euro yesterday following the release of the mixed UK consumer price inflation data. Although data showed an uptick in the annual headline inflation rate, core consumer price inflation in the nation nudged lower. In light of the recent quarterly inflation report, which indicated that low energy prices are likely to weaken Britain’s inflation going forward, attention among market participants is expected to remain on domestic wage growth.
US Dollar – US Markets
The US Dollar is trading close to overnight highs against the Japanese Yen and the Pound this morning, ahead of the FOMC minutes in the US later today. The minutes will attract significant attention among market participants, especially after the US Fed ended its bond buying programme in its policy meeting last month and adopted a seemingly hawkish stance in the post meeting statement. In the midst of steadily growing anxiety over the Fed’s stance in 2015, today’s minutes will be eyed for more clarity on the views of policymakers regarding interest rates, inflation and risks to economic growth.
In yesterday’s trading session, the greenback gained ground against the Pound following higher than anticipated producer price inflation in the US for October, stoking expectations of an upswing in tomorrow’s consumer price inflation report. Separately, the NAHB report revealed that sentiment among homebuilders improved for November and strengthened prospects that the US housing market recovery is gaining traction.
Euro – European Markets
The common currency gained ground against its major counterparts in yesterday’s trading session. The German ZEW survey released yesterday showed that overall investor sentiment improved and that investors expect the nation’s macro health to pick up going forward. Tomorrow, market participants will keep a tab on the preliminary manufacturing and services PMI readings across key European nations. Most of these readings are expected to show that domestic activity across these nations is gaining traction and to offer further hints that the economic trend in Europe is improving.
The single currency continued to gather traction against its peers during the course of today’s trading session and nudged well above the 1.25 mark against the US Dollar. Data released earlier today showed that the seasonally adjusted current account surplus in the Euro zone widened for September, as a weak Euro continued to boost exports. The US FOMC minutes scheduled later today is likely to attract considerable attention among investors in the Euro- US Dollar pair.
Other Currencies – Highlights
The Japanese Yen touched fresh multi year lows against the greenback after the Japanese Prime Minister, Shinzo Abe, surprisingly called for an early parliamentary election of the lower house. He further indicated that he plans to delay the sales tax increase in the nation, especially as the first sales tax hike has continued to weigh on domestic consumption. With the Japanese economy slipping into a recession unexpectedly during the third quarter, an early election is expected to stoke uncertainty surrounding Japan’s macro health. Meanwhile, the BoJ kept its monetary policy unchanged in its policy meeting earlier today.
With Japan’s trade data scheduled later today, the Japanese Yen is likely to witness some volatility in the latter half of today’s trading session. Additionally, the FOMC minutes in the US will be a key macro update today for further direction to risk appetite.