- Lower than expected Manufacturing Production figures out of UK put pressure on the GBP/USD leading into the Bank of England’s rate announcement at 9:00pm. Pound was trading 1.2937 on the London cash open, hitting a low of 1.2849 after the BOEs comments.
- BOE leaves rates on hold at 0.25% overnight.
- They see inflation peaking toward the end of 2017, however longer term monetary policy may need more rapid tightening than the market expects. BOE’s Carney noted while economy is growing UK household income and wage growth will struggle, and this is not necessarily due to Brexit, but pre-existing.
- EUR/USD dipped down to 1.0840 after the BOE comments and relatively dovish comments from ECB Vice President Constancio, after he stated “Monetary policy loose for longer is less risky than premature withdrawal of stimulus.” A close in the red today would be 5/5 this week, as the currency takes a breather from French elections.
- USD/JPY also came under pressure hitting session lows of 113.48. The pair ran into resistance at 114.35 after a solid three-week rally. The currency spent most of Jan-March in this area (120.00-150.00), so while longs may look to cover, it wouldn’t be surprising to see choppy action in the short term.
- US equity markets, rates, and the US Dollar Index fade modestly due to a lack of momentum rather than specific news. Washington concerned over FBI director firing, worried tax cut legislation could get delayed
- The Nikkei found resistance yesterday at the 20,000 level, sellers keeping price below for the day. Some serious support at the 19,665 level.
Today’s Economic calendar (AEST)
- 4:00pm German Prelim GDP
- G7 Meeting Day 1
- 10:30pm US CPI & Retail Sales figures
- Saturday: Day 2 of G7 Meeting
