ECB and BoE Policy Meetings Today
In today’s trading session, the ECB’s policy meeting is likely to hog the limelight with the central bank expected to offer details of its asset purchase programme, set to begin later this month. In the UK, the BoE’s meeting is unlikely to attract much attention among market participants, particularly considering that the central bank is widely expected to maintain its current stance. Going forward, tomorrow’s consumer inflation expectations survey in the UK will be noted, especially after Mark Carney recently hinted that weakness in the nation’s inflation is expected to remain short-lived.
Across the Atlantic, today’s factory orders data for January is expected to show that demand among local manufacturers rose for the first time in the last six months.
Pound Sterling – UK Markets
The BoE, in its policy meeting today, is anticipated to keep its key interest rate unchanged at 0.5%. Considering that officials have remained unanimous in their support for maintaining the BoE’s current policy stance of late, traders expect no major change in the voting pattern in the meeting today. However, the minutes could prove interesting and will be eyed for any growing divergence among BoE officials, especially after a few policymakers expressed differences over their outlook towards the timing of an interest rate rise in the UK. The Pound is trading on a firmer footing against the common currency this morning. Later today, investors in the Pound-Euro pair will keep a tab on the ECB’s policy meeting to get more details about the central bank’s quantitative easing programme, which is expected to begin later this month.
Sterling lost ground against the US Dollar yesterday after the release of the downbeat services PMI report in the UK. This print revealed that expansion in Britain’s dominant services sector slowed unexpectedly for February, although the hiring pace across this segment remained firm.
US Dollar – US Markets
The greenback firmed against the majors yesterday, boosted by mostly upbeat economic data releases from the US. The payroll services firm, ADP, in its employment report revealed that the private sector added more than 200K jobs for February, though slightly below market expectation. Meanwhile, the ISM survey showed that service sector activity expanded at a faster than expected pace for February. Finally, the US Federal Reserve’s latest Beige Book report indicated moderate growth in most of the sectors in US. However, the central bank noted that the recent plunge in oil prices and a stronger US Dollar weighed heavily on export demand in the manufacturing, agriculture and energy sectors.
The US Dollar is trading higher against the Euro this morning, ahead of the ECB’s policy meeting later today. On the macro front, investors will be interested in the weekly report on unemployment benefit claims scheduled later today. But largely, traders will look forward to Friday’s nonfarm payrolls report after yesterday’s ADP data showed a lower than anticipated growth in payrolls through February.
Euro – European Markets
The Euro is trading close to its multi-year lows against the greenback this morning, ahead of the ECB’s policy meeting later today. The central bank is expected to unveil more details about its quantitative easing programme following the policy meeting. Meanwhile, just released data from Germany showed factory orders contracting at a steeper than expected pace for January. Moving ahead, investors will keep a tab on the industrial production data from Germany, scheduled tomorrow. Germany’s industrial production is expected to grow for January as a fall in energy prices seems to have led to higher demand for the nation’s products.
The single currency continued to slip against its key peers in yesterday’s trading session. Meanwhile, data released yesterday showed that the Euro zone’s retail sales rose more than market expectations for January. Additionally, yesterday’s PMI data confirmed that service sector activity picked up for February, but at a slower pace than projected in the preliminary figures.
Other Currencies – Highlights
The Australian Dollar is trading in a tight range against the greenback this morning, following the release of mixed Australian economic data. Data released showed a rise in Australia’s retail sales for January. After a modest increase in retail sales in the previous month, January’s figures were exactly in line with market expectations. On the flip side, Australia’s trade figures showed that the deficit for January widened more than market estimates. A weaker Australian Dollar played a key role in the rise in the total value of imports during the month. Separately, in a speech today, RBA Deputy Governor, Philip Lowe, stated that the Australian Dollar was relatively high given the state of the domestic economy and highlighted the RBA’s guidance that further easing may be appropriate going forward.
The GDP data released yesterday showed a modest growth in the nation’s economy for the fourth quarter of last year. The soft growth is reflected in the nation’s falling mining investment. On Tuesday, the RBA left its interest rates unchanged but signaled it may take future monetary action for broader based economic growth in the nation.