Investors eagerly anticipate BoE offerings

Thursday, August 06, 2015

It’s finally here, the day market commentators have dubbed ‘Super Thursday’ as the Bank of England prepares to release a torrent of reports, data and analysis on the UK economy. At 12pm today the central bank will announce its interest rate decision for August, which analysts widely expect will be maintained at 0.5%. Accompanying this will be the breakdown of how the MPC voted with investors watching closely for any shift in sentiment among the voting members. Simultaneously the Bank of England Inflation Report will be released which will provide updated forecasts for the UK economy and offer additional insight into policymakers outlooks. Recent comments from BoE Governor Mark Carney have struck an increasingly hawkish tone and accordingly market participants will be paying close attention to the wage outlook in the inflation report.

The case for a US rates rise continued to strengthen yesterday as better than expected US data saw confidence in the economy improve. Following on from Atlanta Fed President Dennis Lockhart’s bullish comments on Tuesday yesterday’s release of the ISM non-manufacturing composite for July saw a surprise increase to 60.3 against expectations of a modest 0.2 point month-on-month improvement to 56.2. The final reading for Markit’s services PMI saw an upward revision to from 55.2 to 55.7 further bolstering support for a rates rise in September. The dollar strengthened for third straight session yesterday, with the dollar index rallying towards 98.218 against a basket of major currencies early on before pulling back slightly towards the end of the day. Significant gains were made against the yen which traded briefly towards 125.00 against the dollar, reaching an eight and half week low against the greenback.

As the camp expecting a rates rise in the coming months from both US and UK central bankers gains support, investors will be paying close attention to macroeconomic data releases. Over in the UK before we have the Bank of England releases, investors will have plenty of time to mull over industrial production data for June with the NIESR GDP estimate for July rounding up the UK’s releases. Over in the US, challenger layoff and initial weekly jobless claims will offer further granularity on the state of the US labour market with investors eagerly anticipating the release of July’s non-farm payrolls and the unemployment rate, both due out tomorrow.

USD posts gains against JPY on expectations for a rates rise

JPY Curncy Japanese Yen Spot 2015 08 06 08 24 23

Events for today

0001

UK

Jul

Halifax House Price Index

0600

JP

Jun

Leading Index

0700

DE

Jun

Factory Orders

0930

UK

Jun

Industrial Production

1200

UK

Aug

BoE Rate

1200

UK

Aug

BoE Inflation Report

1230

US

Jul

Challenger Layoffs

1330

US

w/e

Jobless Claims

1500

UK

Jul

NIESR GDP Estimate

1530

US

w/e

EIA Nat Gas

Topics: US Fed, BoE, JPY, Unemployment
More from: Kash Kamal