Euro, GBP under pressure on dovish ECB and BoE views
Today’s Economic Data:
- UK RICS house price balance 44% vs. 54%
- Japan Core machinery orders m/m -5.7% vs. 3.3%
- Japan current account 1.59 trn vs. 1.28 trn
- Switzerland unemployment rate 3.4% vs. 3.4%
- Germany trade balance 19.6bn vs. 20.2bn
- Bank of England leaves rates unchanged at 0.5%
- BoE MPC Rate hike 1 – 0 – 8
- ECB monetary policy meeting minutes
- Canada Housing starts 231k vs. 202k
- Weekly US unemployment claims 263k vs. 274k
- Canada New HPI m/m 0.3% vs. 0.2%
Later:
- Fed’s Bullard Speech
- BoE Governor Mark Carney speech
- FOMC meeting minutes
The Asian equity markets were mixed today as the Nikkei and the Hang Seng dropped -0.99% and -0.71% respectively. The Asian trading session saw the release of some economic data from Japan. Core machinery orders fell -5.7% for the month, below estimates of 3.3%. The Japan economic watchers sentiment was down to 47.5 from 49.3 last month. The Japanese Yen continued to firm up against the Greenback as the USDJPY is poised to post another down day in the markets as USDJPY aims to recover off the session lows below 119.72.
The Australian dollar is weaker today, down -0.25% for the day, but the currency remains well supported above 0.7153. However a break above yesterday’s high of 0.7226 is required in order to ascertain further bullish sentiment in the markets. The Kiwi dollar is trading flat for the day after the currency decline briefly below 0.6598 after it hit a new high of 0.664 yesterday.
The European markets were trending higher with the German DAX up 0.20% while the FTSE100 gained 0.37%. Data from Europe saw the Swiss unemployment rate which was modestly higher at 3.4%, from 3.3% last month. The ECB’s monetary policy meeting showed that the central bank was committed to its QE program hinting that it could expand beyond September 2016. The Euro posted sharp losses on the release of the minutes after the single currency initially rallied to 1.13.
From the UK, the Bank of England’s monetary policy meeting today saw policy unchanged with the MPC votes staying unchanged at 1- 8. In its meeting minutes, the BoE policy makers noted that the UK economy was strong enough to sustain the slowdown from China while noting that there was room to keep interest rates accommodative as inflation remains weak. The British Pound weakened on the news as the Cable declined from the highs of 1.5365, trading lower by -0.29% for the day.
The US session saw the release of the weekly unemployment claims which increased less than expected by 263k below estimates of 274k. The US Dollar remained muted to the release ahead of the FOMC meeting minutes due later this evening.
Canada’s new home price index increased 0.3% for the month, more than the expected 0.2%. The Canadian dollar was seen paring some of the gains as the USDCAD posted a bullish candle yesterday while remaining flat for the day.
