Pound, Euro and US Dollar Aim Higher on BOE, ECB and Fed Rhetoric
- 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.
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|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|
|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|
|CCY||Supp 3||Supp 2||Supp 1||Pivot Point||Res 1||Res 2||Res 3|
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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