Newsletter – 3rd November 2017

Morning Bulletin

Yesterday

  • The Bank of England’s monetary policy meeting of course dominated yesterday’s headlines, and as widely expected the central bank opted to hike interest rates by 25 basis points to 0.50%, in a 7-2 vote. That was the first hike in a decade, cancelling out the 25bps rate decrease in the aftermath of the EU referendum vote back in August 2016.
  • Having very briefly spiked upwards when the hike was confirmed, the Pound was almost immediately sold-off aggressively in FX space as the BOE’s accompanying policy summary was digested and deemed to be Dovish in nature (i.e. keeping rates at current levels for forseeable). The BOE struck a very cautious tone, and any suggestions of another hike coming as soon as Q1 in 2018 appear to be firmly off the table.
  • Sterling plummeted by around a cent against the US Dollar and the Euro in a matter of seconds following the announcement, and having traded as high as 1.3320 and 1.1448 in the morning, Sterling closed the day down at 1.3050 and 1.1200 against the Dollar and Euro respectively.
  • Speaking in the afternoon BOE Governor Carney reiterated his view the bank would require another two rate hikes in the next three years according to their current GDP forecasts.
  • Earlier in the morning UK Construction PMI came back better than expected at 50.8 for October, so slightly into expansionary territory. A print of 48.3, and fall into industry contraction had been expected.
  • US Unemployment Claims 229K (235K Exp)

 

Overnight

  • As widely anticipated President Trump has confirmed that Fed Governor Jerome Powell will be his nomination for the next Federal Reserve Chair.
  • Australia Retail Sales m/m 0.0% (0.4% Exp)
  • China Caixin Services PMI 51.2 (50.8 Exp)
Today

  • UK Services PMI is our key print this morning at 9.30am.
  • This afternoon could prove a busy end to the week with a raft of key jobs data out of both Canada and the United States due at 12.30pm, with US Non-Farm the biggest print.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1205 +0.04
GBP/USD 1.3052 -0.04
EUR/USD 1.1646 -0.10
AUD/USD 0.7678 -0.44

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Services PMI 53.3 53.6
12.30 CAD Employment Change 15.3K 10.0K
12.30 CAD Trade Balance -3.0Bn -3.4Bn
12.30 CAD Unemployment Rate 6.2% 6.2%
12.30 USD Avearge Hourly Earnings m/m 0.2% 0.5%
12.30 USD Non-Farm Employment Change 312K -33K
12.30 USD Unemployment Rate 4.2% 4.2%
12.30 USD Trade Balance -43.3Bn -42.4Bn
14.00 USD ISM Non-Manufacturing PMI 58.5 59.8
14.00 USD Factory Orders m/m 1.3% 1.2%