The Fed can start tapering already this November, oil is rallying pushing the Canadian dollar up! Jump in to know more!
2-0-7 - something new for the BOE
The Bank of England released an interest rate. As expected, it was left on hold at 0.5%. However, this time votes were divided: 7 members voted to keep the rate unchanged when 2 voted to hike. It can signal the rate increase in May. Moreover, the governor Mark Carney said that the prospects of excess demand over the forecast period, an ongoing tightening of monetary policy can support the inflation return to its target.
However, the statement contained mixed data. Let’s see.
- CPI inflation fell from 3.0% to 2.7% in February. And it is supposed to fall further, but it will stay above 2.0%.
- Pay growth continued to increase. And it is anticipated to rise further based on the tightening labor market. So growth in wages and unit labor costs will rise in the future.
- The unemployment rate stayed low.
- US GDP growth was weaker in the fourth quarter but the central bank sees indicators of exports and investment point to a stronger picture.
- Carney did not leave Brexit negotiations out of attention. According to the BOE’s release, Brexit will stay a source of uncertainty, weighing on households, businesses and asset prices.
Although we can anticipate a tighter monetary policy and soon rate hike, the Governor said nothing concrete. The statement was quite vague. Furthermore, investors anticipated the rate hike in May, so it did not become a surprise. As a result, the pound has weakened. If the greenback is able to recover, the sterling will fall further. The support lies at 1.4070.
The Bank of England will hold a meeting on Thursday at 14:00 MT time (GMT+3).
The US showed strong retail sales for August despite the spread of the Delta virus strain. As a result, the US dollar rocketed and gold dropped by 2286 points in half an hour after the release.
The US dollar is heading to close the seventh day in the red as it remains under selling pressure. The US data at 15:30 GMT+3 (jobless claims and Philly Fed Manufacturing Index) may support the greenback if it's strong.
Canada will publish the Retail Sales and Core Retail Sales on October 22, at 15:30 MT time (GMT+3).
The United States will release the weekly Unemployment Claims on October 21, at 15:30 MT time (GMT+3).