Market and Friday

After BoE, ahead of US PCE

By: Ahura Chalki

Market analyst – IFC Markets

Yesterday, the Bank of England had a monetary policy meeting and rate decision. Overall, QE and Rates did not change, but its hawkish stance was less than market expectations and was the cause of the pound’s fall. As a result, the sterling against the US dollar fell about 95 points from its high to 1.3893, giving back some of the gains in the past three days. According to the central bank’s policy statement and meeting minutes, the benchmark interest rate will remain unchanged at 0.10%. The committee members will maintain a total asset purchase of 895 billion pounds with a vote of 8:1. As we were expecting, the only opposing voice comes from Chief Economist Haldane taking part in the meeting for the last time before leaving. BoE mentioned that earlier tightening policies could create a barrier to economic recovery. Generally, BoE MPC members emphasized that the central bank will not start to tighten monetary policy until significant progress has been made in eliminating idle production capacity and achieving the 2% sustainable inflation target.

Yesterday also, we had some critical data from the US, such as Durable Good Orders, GDP, and Employment data. Overall, the US data was a bit disappointing. Among FED speakers, Dallas Fed President Kaplan reissued a hawkish remark and said that he would reduce asset purchases as soon as possible.

Overnight and after the report confirming that US President Joe Biden embraced a bipartisan Senate infrastructure deal, SP500 and Nasdaq both hit new records high. 

FX Market: 

DXY: The US dollar index is still holding its gains around 91.75. 

Euro: The euro closed slightly higher against the US dollar at 1.1930, with an intraday volatility of nearly 40 points. In the early trading hours of today, it also continued its gain towards 1.1945. 

GBP: After the Bank of England monetary policy meeting, Cable ended its three-day gain with a 0.5% decline, trading at 1.3920.

Yen: Japanese Yen remains stable against USD At 110.80 – 111.00.

Kiwi: The New Zealand dollar continued its four day gain against USD, closed at 0.7058, and today, for the fifth day in a row, continued the growth towards 0.7075

Aussie: Same as Kiwi, the Australian dollar also recorded 4-day gains against the US dollar and closed at 0.7581. Today Aussie also holds its uptrend above 0.7590. 

CAD: Loonie was weaker against the USD and closed at 1.2319. 

Commodities: 

Gold: Still yellow metal trading in its range between 1,770 and 1,788. Any trend needs to pass these levels. 

WTI: US crude oil closed up more than 1.3% at $73.22 per barrel. According to the United States officials, negotiations on Iran’s Nuclear Deal with Iran will resume as early as next week.  


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