The BOE stepped up to the crease yesterday and did what it had to do given the negative impact on the UK economy from the Brexit vote. Interest rates were cut by 25 bases points to 0.25% while the QE outlay was bolstered by 60B to 435B all the while the BOE stated that the aftershock of Brexit is still not clear and that more measures could be taken if warranted. Markets reacted accordingly, with the GBP tanking 100`s of pips across the board while UK equity indexes soared as traders further inflate the bubble on the back of more cheap money.
Today sees several important release being made from the US and Canada, with the most notable being the all-important NFP figure which is expect to show that employment picked up by 180k in the last month and of course the Average Hourly Earnings figure, expected at 0.2%, an important leading inflation figure which gauges the future spending of consumers. Should both figures beat expectations, the USD will soar from its recent subdued levels as markets price in an improvement in the US economy and more importantly an increase in the probability of the Fed acting sooner rather than later to increase rates. Mixed figures will also have a positive effect on the USD albeit at a lesser intensity while worse than expected figures for both, will see the USD tank as markets price in a weaker US economy and price in the drop in the probability of Fed action.
Canada will also release key data, which the struggling CAD, which has come off its best levels in recent weeks thanks to sliding crude, will look on with hopefulness as better than expected data will prop up the CAd and give some respite to CAD bulls.
Today’s key economic data is as follows:
- Halifax HPI m/m expected at -0.1%
- Employment Change expected at 10.2k
- Trade Balance expected at -2.6B
- Unemployment Rate expected at 6.9%
- Ivey PMI expected at 51.9
- Average Hourly Earning m/m expected at 0.2%
- Unemployment Rate expected at 4.8%
- Non-Farm Employment Change expected at 180K