Expect Currencies To Move Within Recent Ranges Today
On the currency front, the light nature of the data/events calendar meant, as expected, that there was little to provide fresh direction. However, disappointing US trade data for August did put some downward pressure on the dollar.
In overnight news, the Bank of Japan left monetary policy on hold. There had been some speculation that they could announce further easing measures given the economic slowdown and still very weak inflation. The post-meeting press conference did not provide any strong indications that policy could be loosened in the near future.
In terms of yesterday’s FX moves, for the third day in a row the EUR/GBP pair took a look above 74p, but was once again unable to sustain the move. Although, EUR/USD has managed to regain a solid footing above the $1.12 level, while cable (GBP/USD) is back up around the mid $1.52 mark.
Turning to the day ahead, the schedule remains relatively sparse. Although, industrial output data from Germany and the UK (both August) could still garner some attention. Overall though, unless the calendar throws up any major surprises, we could see the main FX pairs continue to trade within recent ranges today.
San Francisco Fed President, John Williams states Fed should fully communicate rate rise.
Mr Williams stated that it shouldn’t be the case that ‘no one is expecting a rate rise’. Williams believes that there has been no signs of a worsening global outlook. While the labour market continues to improve towards full employment of 5% in his opinion. Currently the US unemployment rate is at 5.1%.
Most interestingly Mr Williams stated that 100,000 jobs per month will soon be enough to sustain America’s economic growth and stability. Read more
Interview with Nick Carn and Tim Coulter regarding the Bank of England
Currently BoE interest rate lift off is being priced in for the end of 2016 to beginning of 2017 by the markets. However Nick Carn is suggesting an earlier rise because as employment continues to rise you can expect inflation to begin rising. Watch the Interview on Bloomberg.
A further six men begin trial for Libor rigging
IMF reduces global growth for the year
The IMF has reduced the global growth target for the year to 3.1% from 3.3%. The IMF report warns that risk of a poor outcome are more pronounced for Brazil, Russian and South Africa than a few months ago.
The IMF quotes Brazil, Russia and South Africa as example where the risk is most pronounced because it is the emerging economies which account for the lion share of global growth. Read more about effects of Commodity prices.
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