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Market Vibrations: News and Commentary from the Europe Desk (1220 GMT)

Market Vibrations: News and Commentary from the Europe Desk (1220 GMT)

Research, Research Team

1220 GMT: Bank of England today decided to keep its benchmark interest rate at its current low of 0.5%. Additionally, the BoE increased its asset purchase target by £50 billion to £325 billion. The Pound was (relatively) unaffected in the immediate aftermath of the release, which had already been priced into the market. However, cable did give a somewhat counterintuitive jump after the release, possibly as market players realized the risk of further quantitative easing has been mitigated for the time being.

1120 GMT: There could be even further delays to the Greek bailout as Papademos insists on revising Greece's 2014 budget targets, only informing EU leaders of this at 6am this morning, the FT reports. Greek opposition leaders are sticking their guns regarding further austerity measures.

0950 GMT: UK Industrial and manufacturing production rose more than forecast by economists in December. Monthly industrial production came in at 0.5% versus the expected 0.2%, while manufacturing production rose a full percentage point. A breakdown of the data showed that the overall rise was led by increases in the transport equipment and food sectors. Cable jumped by about 20 points on the news, but markets remained more focused on the Bank of England’s release expected later in the day.

0842 GMT: Spain's finance minister coming out with some dire predictions, saying he expected contraction in Q1 2012 to increase versus Q4 2011. He added that there are no plans for additional tax increases. Meanwhile, the INSEE sees French industry investment up 7% in 2012 after a revised 10% in 2011.

0725 GMT: The talks between Greek political parties on further austerity measures demanded by the Troika finished after midnight in Athens with one issue, supplementary pensions, still outstanding. The parties agreed to cut the minimum wage by 22%, and the Greek government has been given two more weeks to to find another 300 million in budget cuts. Meanwhile, Japanese and Swiss consumer confidence appear to be rising with the former coming in at 40.0 versus 38.5 expected. The Swiss SECO survey came it at -19 versus -22 expected. Markets are poised for siginificant event risks later in the day with both BoE and ECB scheduled to deliver their benchmark rates. Significantly, the BoE is expected to increase QE by expanding its asset purchase target by GBP 50b, an development which has already been priced into the market but the BoE ha been known to throw curveballs before.

Market Vibrations is a DailyFX feature which follows the European trading session with real-time updates and breaking news and analysis. It is updated regularly, so check back for the latest FX developments.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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