Pound, Euro and US Dollar Aim Higher on BOE, ECB and Fed Rhetoric

2015-10-08 05:35:00

Talking Points:

Pound, Euro May Rise as BOE, ECB Disappoint Dovish Market Expectations
September Fed Meeting Minutes May Boost US Dollar, Undercut Risk Appetite
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The British Pound may continue higher after scoring the largest two-day advance in three weeks as the Bank of England rate decision comes across the wires. Markets will be most concerned with the voting pattern on the rate-setting MPC committee and the tenor of rhetoric on display in the policy meeting Minutes document released alongside the announcement.

UK news-flow has also increasingly improved relative to consensus forecasts since September’s sit-down. Priced-in inflation expectations and 2015-16 GDP growth bets firmed over the same period. This means a dovish turn in policymakers’ posture is relatively unlikely even as recent financial market tumult has traders yearning additional accommodation.

Status-quo announcements from the RBA and the BOJ proved supportive for the Australian Dollar and the Japanese Yen respectively this week. One might have expected more tepid responses considering both outcomes printed in line with baseline forecasts, meaning they ought to have been mostly priced in. This hints at an underlying expectation of expanded policy support among investors. Sterling may rise if the BOE does not validate such speculation.

The Euro may likewise rise following the publication of minutes from September’s ECB meeting. While the central bank has signaled a willingness to expand stimulus as needed, a swift rebound in inflation expectations since late August has probably defused the need for near term action. Language suggesting as much in the minutes document is likely to offer support for the single currency.

Finally, the spotlight will turn to minutes from last month’s Fed meeting. Traders will look for resolution of conflicting cues from September’s timid policy statement and subsequently hawkish commentary from nearly all voting members of the FOMC committee, including Chair Yellen. Comments suggesting the decision to withhold a rate hike was precautionary rather than substantive may boost the US Dollar against sentiment-geared Australian, Canadian and New Zealand alternatives. It may likewise fuel risk aversion, limiting the greenback’s potential against anti-risk currencies like the Euro and Yen.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
21:00	NZD	ANZ Truckometer Heavy (MoM) (SEP)	1.7%	-	-0.5%
23:01	GBP	RICS House Price Balance (SEP)	44.0%	55.0%	53.0%
23:50	JPY	Machine Orders (MoM) (AUG)	-5.7%	2.3%	-3.6%
23:50	JPY	Machine Orders (YoY) (AUG)	-3.5%	3.5%	2.8%
23:50	JPY	BoP Current Account Balance (¥) (AUG)	1653.1B	1226.0B	1808.6B
23:50	JPY	BoP Current Account Adjusted (¥) (AUG)	1590.1B	1291.1B	1321.8B
23:50	JPY	Trade Balance BoP Basis (¥) (AUG)	-326.1B	-395.1B	-108.0B
02:00	JPY	Tokyo Avg Office Vacancies (SEP)	4.53	-	4.72
04:30	JPY	Bankruptcies (YoY) (SEP)	-18.62%	-	-13.06%
05:00	JPY	Eco Watchers Survey Current (SEP)	47.5	49.0	49.3
05:00	JPY	Eco Watchers Survey Outlook (SEP)	49.1	48.3	48.2
05:30	AUD	Foreign Reserves (A$) (SEP)	74.7B	-	71.2B

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
05:45	CHF	Unemployment Rate (SEP)	3.2%	3.2%	Medium
05:45	CHF	Unemployment Rate SA (SEP)	3.4%	3.3%	Medium
06:00	EUR	German Trade Balance (€) (AUG)	19.0B	25.0B	Medium
06:00	EUR	German Current Account Balance (€) (AUG)	16.7B	23.4B	Medium
06:00	EUR	German Exports SA (MoM) (AUG)	-0.9%	2.5%	Low
06:00	EUR	German Imports SA (MoM) (AUG)	-0.6%	2.3%	Low
11:00	GBP	BOE Asset Purchase Target (£) (OCT)	375B	375B	High
11:00	GBP	Bank of England Bank Rate	0.50%	0.50%	High
11:30	EUR	ECB September Meeting Minutes	-	-	High