Markets are awaiting today’s policy meeting at the Bank of England which is expected to produce a rate hike of 25 basis points.
- The Bank of England will be holding a policy meeting today at which it is strongly expected to raise its Official Bank Rate from 5.00% to 5.25%.
- Global stock markets are continuing to trade lower, probably due mostly to the fallout after ratings agency Fitch downgraded its US sovereign credit grade rating from the highest possible rating AAA to the next lower level of AA+. Most global equity indices have moved lower since the announcement, with Asian markets considerably lower –the Nikkei 225 Index is down by more than 1% on the day. Despite this bearish retracement, stock markets generally look very bullish over the long term, especially in the USA.
- In the Forex market, the US Dollar is continuing its medium-term advance against its long-term bearish trend, with the price now established well above the former key resistance level at 101.56. Since the Tokyo session began today, the Japanese Yen is the weakest major currency, while the US Dollar is the strongest, putting the USD/JPY currency pair in focus.
- Yesterday saw the release of a stronger than expected ADP non-farm payrolls forecast, which expects 324k net new jobs to have been created, considerably higher than the 191k which was expected.
- The Bank of Japan began unscheduled bond purchases for the second time this week, buying 5-10 year JGBs.
- There will be a release today of Swiss CPI data, which is expected to show month-on-month deflation of 0.1%.
- There will be release today in the USA of US unemployment claims and ISM services PMI data.
- WTI Crude Oil futures hit another new 3-month high yesterday but has sold off sharply over the past few hours.
- In the commodities market, Cocoa futures will continue to be interesting on the long side to trend traders, having hit a multi-year high price last Thursday.