BOE meeting the key highlight on a busy day

BOE

The dollar is keeping steady post-Fed after recovering from initial losses as the central bank outlined the timing for tapering in a more hawkish-than-expected meeting.

Powell was even explicit about the timeline - something I did not expect - but does it really change anything? I don't think so as this was what the market had anticipated already going into yesterday with the exception being that perhaps there was little thought that the Fed would be so brazen about the whole situation.

For the most part, there is still plenty of focus on China right now and with Evergrande fears being soothed, that is helping to keep equities in a good mood too this week.

There have been quite a few slow/delayed reactions to the FOMC this year but I'd argue that the greenback should keep more buoyed after this one.

The dot plots also show that Fed policymakers are slowly coming around to a quicker date on liftoff, even if the majority still see it as taking place in 2023.

But if inflation developments keep up through to next year and the economy holds up, they'd be running out of excuses not to hike rates I would say.

Looking to today, the pound is in focus alongside the dollar and risk sentiment, as the BOE meets and we could come to see more hawkish undertones revealed.

0700 GMT - Spain Q2 final GDP figures

The preliminary report can be found here. Q2 data at the end of Q3? Need I say more?

0715 GMT - France Sept flash manufacturing, services, composite PMI

0730 GMT - Germany Sept flash manufacturing, services, composite PMI

0800 GMT - Eurozone Sept flash manufacturing, services, composite PMI

The estimates show that the euro area economy should maintain its resilient performance in recent months, with estimates keeping thereabouts even with supply bottlenecks weighing on output in the manufacturing sector. That said, the impact on the euro is likely to be minimal given that the outlook towards year-end is still rather cloudy and the ECB still reaffirming that inflation is very much 'transitory' at this stage.

0730 GMT - SNB announces its September monetary policy decision

The prior decision can be found here. It is pretty much the status quo expected from the SNB and it'd be pretty wild if they do try and mix things up, which they won't.

0830 GMT - UK Sept flash manufacturing, services, composite PMI

UK economic activity is estimated to keep up in September even though there is the likelihood of a slight moderation in manufacturing activity amid supply bottlenecks. That said, growth conditions have peaked during the summer and the thing to watch now is how resilient is the economy in holding up ahead of the likely arduous winter.

1100 GMT - BOE announces its September monetary policy decision

The prior decision can be found here. On the balance of things, the market is expecting more of a placeholder and "keep with the status quo" meeting by the BOE today, thus limiting any major impact on the pound. However, there are some quarters anticipating a more hawkish undertone to be revealed considering that UK inflation continues to run hot. But I'd argue that perhaps policymakers may want to wait to see the impact of the end of the furlough scheme on the labour market before taking any concrete steps towards tightening policy. If anything, the messaging and communique will be the more important detail today and a flattish/less hawkish tone may see some pound players disappointed upon the initial reaction.

That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.