Central bank bonanza continues with the Bank of England
"Get me Jerome on the line..."
Good day, everyone! Hope you're all doing well as we get things going in the session ahead.
It's all about the dollar as the Fed and Powell failed to leave a wide door open for more rate cuts down the road (data dependent) while at the same time affirming that the 25 bps rate cut was merely to "insure" as well as can be seen as an "adjustment".
As such, the greenback is leading gains on the new day with the yen on the back foot as yields posture a little higher after settling lower in overnight trading. US 10-year yields are up by 2.1 bps to 2.035% currently, though off highs of 2.05% seen earlier.
There's quite a bit of technical factors at play here as well with EUR/USD settling below 1.1100 and USD/JPY inching above the 109.00 handle notably.
Looking ahead, we'll have more PMI data (final) to follow in the euro area before we get to the BOE monetary policy decision and inflation report at 1100 GMT.
0715 GMT - Spain July manufacturing PMI
0745 GMT - Italy July manufacturing PMI
0750 GMT - France July final manufacturing PMI
0755 GMT - Germany July final manufacturing PMI
0800 GMT - Eurozone July final manufacturing PMI
The continued slump in Germany's manufacturing sector was the main highlight in the initial releases and the final print should reaffirm sluggish conditions in the region's factory activity. As these are final readings, they aren't expected to produce a heavy reaction unless the figures deviate substantially from initial estimates.
0830 GMT - UK July manufacturing PMI
Prior release can be found here. After Brexit stockpiling in Q1, the manufacturing sector in the UK continues to feel the aftershocks and is sinking deeper into contraction territory with the July print today set to reaffirm that notion. With the pound already under pressure lately, more bad news won't help to alleviate the pressure on the currency; though the focus will be leaning more towards the BOE message today.
1100 GMT - BOE announces August monetary policy decision
1100 GMT - BOE releases latest inflation report
Prior decision can be found here and the prior inflation report can be found here. The central bank is expected to hold rates steady later today but the focus is on the message/language they will give out instead. I reckon the forward guidance should be maintained so be on the look out for any added emphasis on downside risks posed by international developments as well as their view on a no-deal Brexit (if that has changed since Johnson's recent stance). With other central banks erring to be more dovish, it would be no surprise if the BOE starts leaning towards a similar stance as well.
1130 GMT - BOE governor Mark Carney press conference
Similar to the statement, the focus will be on Carney's angle towards the economic outlook and risks affecting that outlook. Besides that, it will be interesting to see if they still assume a smooth Brexit outcome and if those odds are the same given recent developments between Boris Johnson's 'dream team' and the European Union.
1130 GMT - US July Challenger job cuts data
Prior release can be found here. The data provides information on the number of announced corporate layoffs by industry and region and acts as a general labour market indicator. Low-tier data ahead of the non-farm payrolls release tomorrow.
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading!
