Summary:
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Markets continue to be driven by Fed decision
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Bank of England set to announce latest policy at 12PM (BST)
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UK retail sales and US initial jobless claims also out
The most hyped Fed decision of the year didn't fail to live up to its billing with a clear dovish shift causing major moves across all asset classes. Stocks soared along with bonds as yields plunged with the US dollar falling strongly across the board as most policymakers slashed their rate outlook for the rest of the year and somehow managed to meet what was a high level of expectations. Gold prices began to rise on the news and they received a further boost overnight with news that Iran had attacked a US drone aircraft. This move further escalates rising tensions between Washington and Tehran and has also caused a rally in the price of crude, with the oil price particularly sensitive to any threat of supply disruptions in the region.
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Gold prices were already on the rise after the Fed and jumped overnight on the increasing threat of a military conflict between the uS and Iran. Source: xStation
9:30 AM BST - UK retail sales
Despite the ongoing Brexit saga, data in the UK has been just about holding up ok of late. This mornings retail sales is unlikely to be a major market mover with the Bank of England rate decision just a couple hours later but it could provide some further insight into the health of consumer spending. A M/M reading of -0.5% is expected after last time saw a flat print of 0.0%
12:00 PM BST - Bank of England rate decision
UK rate setters are almost unanimously seen as keeping the base rate on hold this lunchtime with the MPC forecast to vote 9-0 in favour of maintaining a 0.75% level. There’s no press conference from Governor Carney or accompanying inflation report so it is unlikely to provide anywhere near the same level of market impact as last night’s Fed, but for GBP traders it remains worthwhile watching nonetheless. The pound has extended its recovery in recent trade and the markets will also have an eye on the Tory leadership race which is expected to be whittled down to just 2 today. Boris Johnson is pretty much a shoo-in to go to the head-to-head postal vote amongst 160,000 Conservative party members but it remains who will join him.Rory Stewart was eliminated last night and that leaves Jeremy Hunt, Michel Gove and Sajid Javid to complete the remaining 4.
1:30 PM BST - Initial jobless claims, Philly Fed
The release of second tier data from the US this afternoon pales into comparison after the Fed, but the latest employment and manufacturing figures could give further insight into the health of the economy. Weekly initial jobless claims are forecast to come in at 220k from 222k last time out while the Philly Fed manufacturing could actually be the more important, with a 10.6 print expected after 16.6 previously. Monday’s disastrous Empire State manufacturing index caused a bit of a shock and another bad figure this afternoon could heap more pressure on the US dollar.
