Early fireworks for Super Thursday
Super Thursday is not just UK-centric this month with a raft of figures, speeches and announcements. At 10am the UK High Court will announce it’s ruling on whether MP’s consent is needed to trigger Article 50; this represents one of the last barriers to Brexit commencing. The Pound will benefit if Brexit must be ratified in Parliament.
The Bank of England (BoE) interest rate decision will be accompanied by the Quarterly Inflation Report and Asset Purchase Facility. A surprise rate cut this month would lead to yet another Sterling selloff. Professor David Miles, a previous Monetary Policy Committee member, stated that “inflation will pick up a bit. It’s likely to exceed its 2% target and then break through the 3% barrier next year”.
The Federal Reserve has held interest rates at 0.5%. The Greenback recovered lost ground against all but Sterling after the Fed signalled that the case for a rate hike has ‘continued to strengthen’. Two members of the Federal Open Market Committee (FOMC) voted for a rate hike, unlike the three we saw at the September meeting, but the outcome was in line with expectations.
GBPUSD initially dropped back below 1.2300 before peaking at 1.2353 around 7am this morning. EURUSD price action remains almost exclusively driven by USD dynamics, with the Presidential election being centre stage. Today Initial Jobless Claims data are due followed by Markit’s Services PMI, the more relevant ISM Non-manufacturing and September’s Factory Orders.
Eurozone October Manufacturing PMI beat expectations and posted 0.2 higher than September’s figure. The German unemployment rate saw a post-unification low of 6% after falling by 13,000 in October.
Data to watch: 9am Euro Economic Bulletin. 9.30am UK Oct Markit Services PMI. 10am Euro Unemployment Rate. 12pm UK BoE Interest Rate Decision, Voting, Minutes. Asset Purchasing Scheme & Quarterly Inflation Report. 12.30pm UK BoE Governor Carney’s Speech. US Initial & Continuing Jobless Claims, NonFarm Productivity, Unit Labour Costs. 1.45pm US Oct Markit Manufacturing, Services & ISM Non-Manufacturing PMI. Sep Factory Orders.