Investors eye today’s BoE rate decision
10/Feb/2011 • Currency Updates•
All eyes are on today’s BoE interest decision at midday. With rates widely expected to stay at 0.5%, the rate decision is often already priced into the market so traders tend to look at the MPC rate statement which is more focused on the future. However, with surging inflation and growth slowing in the UK economy there is a very outside chance that a surprise rate hike to 0.75% could come in to play when the Bank of England’s Monetary Policy Committee concludes it two-day policy meeting in Thursday morning.
UK visible trade gap widened to a record high in December as the country imported more aircraft before the value added tax hike and partly due to the impact of bad weather. The seasonally adjusted goods trade deficit increased to GBP 9.2 billion from GBP 8.5 billion in November, the Office for National Statistics said Wednesday. Economists had forecast the shortfall to increase to GBP 8.6 billion. Exports rose 1.5% month-on-month to a record GBP 24.2 billion and imports gained 3.5% to GBP 33.4 billion.
The USD generally weakened on Wednesday afternoon after Federal Reserve Chairman Ben Bernanke told lawmakers he remains committed to buying US bonds in support of the fragile economic recovery. Bernanke said that persistent weakness in the jobs market requires the Fed to maintain its record low interest rates and $600 billion quantitative easing program. Underlying inflation is still low and longer-term inflation expectations have remained stable, Bernanke insisted.
The euro slipped against the dollar on Thursday, pressured by fading prospects for a European Central Bank rate hike while a boost the previous day from falling US bond yields proved short-lived, fuelling expectations that it will stick to its well-worn range.
German exports rose for the second straight month in December, albeit at a slower than anticipated rate, while imports plunged unexpectedly, official data showed on Wednesday, Statistical office Destatis said exports rose a seasonally adjusted 0.5% compared to the previous month to 83.2 billion euros, similar to the November result but half the expected 1% increase. Despite missing forecasts, analysts hailed the figures as a sign of continuing recovery in Europe’s largest economy.
The unemployment rate in Australia held steady in January, the Australian Bureau of Statistics said on Thursday, remaining at a seasonally adjusted 5.0 percent – in line with expectations.
Australia added 24,000 total jobs in the month to 11,441,500, blowing past expectations for a gain of 17,500 jobs after adding 2,300 jobs in December.