The US dollar turned to the upside on Monday. Let's discuss what to expect next from the market.
British economy speeds up, increasing chance of rate lift
In June, Britain's large services industry managed to ascend at its fastest tempo since October. That’s what a poll disclosed on Wednesday. It helped market participants to lift bets that the Bank of England is going to have interest rates increased already next month.
After a dismal first four months of this year, the IHS Markit/CIPS services Purchasing Managers' Index managed to tack on to 55.1 in June, thus confounding experts’ average estimates in a Reuters survey of 54.0, intact from May's outcome.
This week June polls for the smaller manufacturing as well as construction sectors surpassed hopes too.
Meanwhile, the major UK currency edged up. As for UK government bond yields, they soared because financial markets priced in a greater likelihood that the Bank of England is going to have interest rates lifted to 0.75% from 0.5% - the reading they have stood at for nearly the whole past decade.
Britain’s key financial institution delayed a highly anticipated rate lift in May after the UK economy speeded down more than predicted for the three months to March, partly because of unexpectedly harsh winter weather.
It’s apparent that high inflation as well as ongoing deep uncertainty as for the terms of the UK’s departure from the European bloc in March next year have heavily suppressed surge.
Additionally, in May the major bank also told that in the event of a recovery, interest rates would likely to ascend for only the second time for more than a decade as a gradual drift away from the emergency stimulus initiative it rolled out during the meltdown.
The Bank of England has predicted a 0.4% GDP surge for the second quarter Besides this, it also expects inflation to speed up soon because of soaring crude.
The market is resilient ahead of the speeches of Fed’s Powell and ECB President Lagarde, but there are still interesting movements.
The uncertainty over US fiscal stimulus and Brexit, and also rising new virus cases deteriorated the market mood. That’s why we can expect the further rally of the US dollar and the fall of riskier assets today.
The focus of traders’ attention shifted from Brexit and the US stimulus to the coronavirus . The WHO claimed that Europe become the new Covid-19 epicenter.
Canada will publish the monthly GDP growth on October 30 at 14:30 MT time.
The European Central Bank publishes the monetary policy statement alongside with an update on the interest rate on October 29, at 14:45 MT time.