Interest Rates, Volatility & Forex
The Bank of England will release its official bank rate later today. Will today’s interest rate decision be enough for Cable to topple 1.30 for the first time since September?
No change to the cost of borrowing is expected, however traders will be tightly glued to the minutes of the meeting, scanning for any hint of a hawkish sentiment.
Given the last meeting’s surprise vote – 1 vote to change, 8 votes to leave steady – there could be another unexpected outcome from today’s meeting minutes, especially given the constant flow of strong data from the UK.
Conversely, today’s manufacturing production data missed expectations at -0.2%. This pushed down sterling, now the currency pair has a little further to climb at $1.290.
On the other side of the Atlantic, the S&P 500 has cause for celebration. The US index smashed yet another record, closing at $2399.63 yesterday. The S&P has gained 7.2% so far in 2017, a staggering result spurred by supportive corporate earnings reports.
The Vix index, a measure of implied volatility, remains under wraps, at 10.21, way below the historical average of 20. Low volatility means investors are feeling optimistic, which is underpinning the gains seen in the market over the past few days.
Another central bank mulling over interest rates is the Reserve Bank of New Zealand. The central bank held interest rates steady yesterday, indicating that it did not expect to raise the cost of borrowing until late 2019. The New Zealand dollar shed as much as 1.8 % against the US dollar thanks to the dovish sentiment.
Commodity Cove
Yesterday, Brent oil jumped above $50 a barrel. Meanwhile, crude oil shot up to $47.95. The increase came late in the trading session, although yesterday’s crude oil inventory dropped underpinned the gains. US crude storages came in at -5.2 million, beating expectations of -2 million.
Copper is rebounding after a sharp sell-off earlier in the week. The supply of copper has tightened in the last quarter, and disruptions at mines around the globe are hitting the availability of the metal. Wil the increase in value last? Maybe not, as the world’s largest importer of natural resources, China, slows down.
Market Watchlist
The most highly-anticipated IPO release since Alibaba (NYSE:BABA), Snap Inc (NYSE:SNAP), released its earnings report yesterday. The results were disappointing, pushing down the share by about 25%
News Today*
11:00 GBP Official Bank Rate
12:30 USD Unemployment Claims
*All times given in GMT