Time Is Up!!
US interest rates have been just shy of zero per cent for the best part of 10 years and market participants are unified in the certainty that this state cannot continue for much longer -the Federal Reserve will have to begin the tightening process of its monetary policy sooner rather than later and the market is looking at this as a turning of a cycle. The US central bank’s monetary policy board meeting started yesterday and the announcement will be out for 1900hrs BST.
Movements in the global currency markets during the past 36hrs have advocated that the Fed may resist the temptation to increase interest rates. The US Dollar was sold off yesterday during the European session and has held firm in overnight trade , we could be seeing a state of sell on rumour buy on fact as market participants square their positions prior to the announcement.
Euro lost ground yesterday after CPI figures came in below expectations. Both CPI and Core CPI dropped 0.1%. The single block currency’s losses were extended against Sterling as the UK job market surprisingly posted positive numbers. GBP posted its biggest gains in a month against the Euro as UK wages rose at the fastest pace in 6 years and monthly unemployment fell to just 5.5%. It will be interesting to see if the disappointing inflation reading could push the ECB to consider an extension to the current QE programme.
Research Released by the Federation of Small Business has found that nearly 41 percent of Britain’s small businesses want to leave the European Union because they do not believe membership is beneficial for their companies. The research from The Federation of Small Business found that 47 % of members wanted to stay in the EU whilst 10.7% of members were undecided.
David Cameron has promised to renegotiate the UK’s connections with the EU and, by the end of 2017, hold a referendum on whether to stay in or leave the Union. According to the research, members who are likely to vote to stay in the EU are those who import and export to the EU. Those members wanting Britain to leave the EU would instead like to see improved trade links with the rest of the world and with the EU and its member states.