13th September 2018 Market Update
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?? GBP – The Bank of England is expected to keep interest rates on hold at 0.75% today, with all MPC members expected to vote for rates to stay the same. Therefore, it is quite unlikely that today’s interest rate decision will have an impact on the markets.
?? EUR – This morning CPI was released from Germany and France, and both came out in line with expectations at 0.1% and 0.5% respectively. However, the focus in Europe today will be on the ECB where it is expected to keep its main refinancing rate at 0.0%. Mario Draghi is then speaking at 1.30pm in the press conference that follows. The ECB aims to wind down its quantitative easing programme to €15 billion a month after September and halt it completely by the end of the year. Draghi’s remarks in the press conference that follows will be the most likely cause of market volatility, as he provides forward guidance.
?? USD – Yesterday PPI came in below expectations at -0.1%, this slightly weakened the Dollar. This afternoon CPI and core CPI are released, with CPI expected to creep up to 0.3%, slightly higher than last month’s reading of 0.2%. A higher than expected reading could strengthen the Dollar, as it would indicate that the Fed will maintain its hawkish stance for the foreseeable future.
12:00pm: MPC Official Bank Rate Votes, Monetary Policy Summary, Official Bank Rate
12:45pm: Main Refinancing Rate
13:30pm: ECB Press Conference
13:30pm: CPI m/m, Core CPI m/m
Summary: Interest rate decisions are being released from the UK and Eurozone today. They are both expected to not change and remain at 0.75% and 0.0% respectively. There are no expectations for the UK to increase interest rates, and with the Brexit uncertainties it makes sense for the Bank of England to keep rates on hold. The ECB is expected to continue to wind down its quantitative easing programme, and forward guidance by Mario Draghi in the ECB press conference is going to be the most likely cause of volatility today.
CPI and core CPI are being released from the US this afternoon. CPI is expected to rise slightly to 0.3% and core CPI is expected to remain at 0.2%.
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