ECB and BoE Rate Announcements
As most of you will have read yesterday, Chancellor Osborne delivered his Autumn Statement in a move which headlined movements in stamp duty and other tax measures. The markets shrugged all this off and didn’t over react to it. We did see Sterling strengthen against Euro and US Dollar yesterday but this was due to poor Euro PMI as opposed to strong UK and US PMI.
Chancellor Osborne announcing that the Government will miss the budget target did not hurt Sterling. The interesting aspect of the statement for the markets was the continuation of the theme that the Government will continue to tackle the budget deficit, whilst it is very much the job of Mark Carney and his colleagues at the Bank of England to stimulate economic growth. Whilst there have been seven consecutive quarters of UK growth, the worrying state of the global economy still urges caution in the UK.
Today, we will see interest rate decisions from the Bank of England and the European Central Bank. Expect absolutely nothing of interest to come out of the Bank of England as the rates will not change and we will not get the minutes for another week. It is also highly unlikely that the ECB will change their interest rates, but with Mario Draghi holding his press conference immediately after the announcement, this is what the markets are looking for. Whilst there may be accusations of repetition of a theme, traders are waiting to see if Draghi will introduce quantitative easing. My guess is no. His other measures have hardly kicked in yet and he’ll probably just continue to flirt with the idea.
Other than the interest rate decisions we also have jobless claims data out of the US.