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Breaking news

Bank of England Leaves Rates Unchanged at 5.25% - Vote 5-4

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

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

Talking Points:

  • Pound, Euro May Rise as BOE, ECB Disappoint Dovish Market Expectations
  • September Fed Meeting Minutes May Boost US Dollar, Undercut Risk Appetite
  • See Economic Releases Directly on Your Charts with the DailyFX News App

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.


Asia Session

21:00NZDANZ Truckometer Heavy (MoM) (SEP)1.7%--0.5%
23:01GBPRICS House Price Balance (SEP)44.0%55.0%53.0%
23:50JPYMachine Orders (MoM) (AUG)-5.7%2.3%-3.6%
23:50JPYMachine Orders (YoY) (AUG)-3.5%3.5%2.8%
23:50JPYBoP Current Account Balance (¥) (AUG)1653.1B1226.0B1808.6B
23:50JPYBoP Current Account Adjusted (¥) (AUG)1590.1B1291.1B1321.8B
23:50JPYTrade Balance BoP Basis (¥) (AUG)-326.1B-395.1B-108.0B
02:00JPYTokyo Avg Office Vacancies (SEP)4.53-4.72
04:30JPYBankruptcies (YoY) (SEP)-18.62%--13.06%
05:00JPYEco Watchers Survey Current (SEP)47.549.049.3
05:00JPYEco Watchers Survey Outlook (SEP)49.148.348.2
05:30AUDForeign Reserves (A$) (SEP)74.7B-71.2B

European Session

05:45CHFUnemployment Rate (SEP)3.2%3.2%Medium
05:45CHFUnemployment Rate SA (SEP)3.4%3.3%Medium
06:00EURGerman Trade Balance (€) (AUG)19.0B25.0BMedium
06:00EURGerman Current Account Balance (€) (AUG) 16.7B23.4BMedium
06:00EURGerman Exports SA (MoM) (AUG)-0.9%2.5%Low
06:00EURGerman Imports SA (MoM) (AUG)-0.6%2.3%Low
11:00GBPBOE Asset Purchase Target (£) (OCT)375B375BHigh
11:00GBPBank of England Bank Rate0.50%0.50%High
11:30EURECB September Meeting Minutes --High

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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