Daily Market Report - 05/02/2016


The Bank of England kept interest rates and their asset purchase program on hold at 0.5% and £375bn yesterday at lunchtime, but the voting moved to a unanimous 9-0-0 in favour of inertia, with Ian Mcafferty relinquishing his position as the MPC’s solitary hawk. In the press conference, BoE governor Carney reiterated the likelihood that the next move in rates will be up. This was covered in the statement, but questioned over recent probabilities of a possible cut, addressed by Governor Carney in the press conference at 1245, affirmed this and was encouragement enough for a GBP rally in yesterday’s trade.


Initial and continuing jobless claims both came out weaker than expected yesterday. This added to dollar weakness following further speculation on Wednesday that the Federal Reserve might not raise interest rates this year. Against a basket of currencies, the greenback fell another 0.6 percent to 96.735, having earlier hit its lowest since early November. The trigger on Wednesday was a weak batch of U.S. sentiment data and New York Fed President William Dudley's warning that a weakening outlook for the global economy would have to be taken into account for upcoming rate decisions.


In a speech yesterday morning, European Central Bank President Mario Draghi's repeated assertion that the ECB would not hesitate to do what was necessary to get inflation back to its roughly 2 percent target did little to halt euro buying. 


Oil extended a rally above $35 a barrel on Thursday, adding to the previous session's 7 percent jump, as support from a weaker dollar offset concern about ample supply and record-high U.S. inventories. Crude rebounded from an earlier decline after an Iranian official was quoted as saying Tehran supported a meeting between OPEC and other oil producers - raising hopes they could take action to support prices despite widespread scepticism in the market.

Key Announcements

1330 – USD – Non-Farm Payrolls expected to fall to 190k from 220k

1330 – USD – Unemployment rate expected to remain unchanged at 5%