Global Markets Hold as BoE Conducts ‘Super Thursday”

Daily Analysis - 04/08/2016

Pound Slips as BoE Rate Decision Approches


The Pound had a bearish morning in anticipation for the BoE’s interest rate decision. As of 07:00 GMT, GBPUSD dropped 0.99% from the closing bell to 1.32855. Last month, the BoE opted to leave the benchmark interest rate unchanged, which came to a surprise to most experts forecasting the Central Bank to reduce rates by 0.25%. The Monetary Policy Committee is facing the same predicament as their last vote, deciding between leaving the rates unchanged again or cutting the rates and risking the Pound dropping even further over the coming days and weeks.

WTI Crude Above $40.00 Mark, Gasoline Inventories Lower than Expected

WTI crude bounced back to $41.39 from $39.24 per barrel following reports of falling gasoline inventories. The RBOB gasoline stockpiles decreased by 3.3 million barrels, far below the anticipated decline of 200,000 equivalent barrels of energy. Although the EIA report detailed rising crude oil stockpiles in the latest reading, crude oil shook off this development, rallying back above $40.00 per barrel overnight and currently trending near $41.11, breaking a ten day bearish skid.



Fed's Evans Predicts at Least One More Rate Hike This Year

Chicago Federal Reserve President Charles Evans spoke to a group of reporters stating, “perhaps one rate increase this year is appropriate…” He also continued to say that he wants to make sure that the 2.00% inflation target, a benchmark level for the Fed, will be reached sooner than later. He currently does not believe the 2.00% inflation target will be reached until 2018 and advises the FOMC to wait as well. Evans is a very influential member with the Federal Open Market Committee, but is not a voting member of the committee this year, with votes rotating between regional Federal Reserve branches.


Bullish ISM and ADP Data Signals Upside Risk

After the results of the ISM non-manufacturing PMI and ADP data were announced yesterday, there is further optimism that the two figures signal a moderate upside risk for Friday’s July payroll report even though an 180,000 nonfarm payroll gain is still foretasted. The ISM NMI fell to a level of 55.5 after a 56.5 result in June, at that point a 7-month high for the non-manufacturing PMI.  For ADP, the 179,000 job rise beat the projected 170,000 private payroll increase estimated, with a 180,000 total payroll increase still being forecast for the official data due from the Bureau of Labor Statistics on Friday.


Aussie Retail Sales Miss Forecasts

A swing and a miss for Australian retail sales was reported earlier after the figure failed to surpass expectations. For the month of June, retail sales rose by a mediocre 0.10% to about AUD 25 billion, printing well short of the 0.40% predicted. The quarterly sales volumes also fell short of expectations, rising only 0.40% opposed to 0.50% anticipated, marking the weakest quarterly increase since the second quarter of 2014.


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