Yesterday Bank of England (BoE) governor Mark Carney pushed sterling off a cliff by suggesting that interest rates could stay anchored to their historic low until 2017, causing significant losses against a basket of currencies.
Having said earlier in the year that a rate hike could come towards the end of 2015 or start of 2016, his comments, dubbed super Thursday, were surprisingly dovish. Reports indicate that until the UK’s headline inflationary figure shows any meaningful pickup they won’t be rushed into implementing policy too soon.
The BoE left interest rates were left unchanged and the monetary policy committee votes came out 1-0-8 as before with former CBI economist Ian McCafferty, the only person voting for a hike. Carney again said that underlying price pressures was not strong enough to justify tightening the monetary policy.
The US jobs report disappointed yesterday with the applications for unemployment benefits climbing to the highest level in five weeks. Unemployment claims came in weaker than forecast at 275k against forecast of 263k.
The data represents a pause in the recent progress that left claims at their lowest level since 1973. Employers intent on ensuring skilled workers remain on their payrolls have been holding the line on dismissals, making adjustments to hiring plans instead in response to the slowdown in overseas economies.
09:30 – GBP – Manufacturing production is forecast to decline
13:30 – USD – Average hourly earnings
13:30 – USD – Nonfarm employment change is expected to increase
13:30 – USD – Unemployment rate is forecast to decrease to 5%