Daily Market Report 07/02/2013

Ahead of the Bank of England and European Central Bank meetings, risk appetite was fairly subdued yesterday in a cautious day of trading.

Whilst the BoE and the ECB are expected to keep interest rates at 0.5% and 0.75%, particular attention will be paid to comments made by incoming BoE Governor Mark Carney at 9.45am and ECB President Mario Draghi at 1.30pm.

Mark Carney recently commented at the World Economic Forum in Davos that central banks haven’t ‘maxed out’ on what they can do to boost their economies, hinting that he may indeed be in favour of further monetary easing. Any suggestion of this in today’s testimony before the UK’s Treasury Select Committee could potentially put the pound under further pressure.

Mario Draghi’s testimony will be analysed in detail as investors will look to take queues from his speech for any hint of monetary easing given the recent criticism of the strength of the euro by the head of the Eurogroup as well as French president, Francois Hollande. As an export dependent region, a strong currency could potentially hinder exports as well as growth.

The only notable economic data from yesterday showed the purchasing managers’ index in Canada rose to 54.8, providing support for the Canadian dollar and the unemployment rate in New Zealand fell to 6.9.

With a plethora of economic data from the UK, euro zone, US, the BoE and ECB meetings and speeches by Mark Carney and Mario Draghi, we expect a volatile day of trading today so clients are suggested speak to their dealer to see how these events will impact the currency pairs.

Key Announcements:

9.30am – GBP – Goods Trade Balance: Expected to reduce to -£9.00bln.

9.30am – GBP – Industrial Production: Expected to improve to -2.2%.

9.30am – GBP – Manufacturing Production: Expected to contract further to -2.5%

9.45am – GBP – Mark Carney’s testimony ahead of the Treasury Select Committee.

10.00am – EUR – European Commission Release Economic Growth Forecasts.

10.00am – EUR – German Industrial Production: Expected to decline to 0.1%.

12.00pm – GBP – BoE Interest Rate Decision and Asset Purchase Facility: Expected to remain unchanged.

12.45pm – EUR – ECB Interest Rate Decision.

13.30pm – EUR – ECB Monetary Policy Statement and Press Conference.

15.00pm – GBP – NIESR GBP Estimate (3M) (Jan)