Fed Minutes, BoE Report Hearings in Focus

UK employment data, the BoE's Inflation Report hearings, and the Fed's meeting minutes are the key drivers today.

Previous Day's Market Highlights

The pound caught a bid tone yesterday morning on reports that the EU parliament would call for privileged single market access for the UK. Sterling-euro rallied above 1.13 and held there throughout the day, supported by euro softness as euro-dollar fell towards 1.23. Sterling-dollar traded back towards 1.40. 
 
Against the commodity currencies, sterling also saw gains. It moved above 1.77 against the Aussie, 1.90 against the kiwi, and 1.76 against the Canadian dollar.
 
Eurozone and German Economic Sentiment readings were higher than forecast but had little market impact, while preliminary Consumer Confidence slowed more than expected. The Aussie initially moved higher as Q4 wage growth picked up before reversing gains on a decline in Construction Work.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1350 1.1512 1.1210 2.62%
GBP/USD 1.3980 1.4346 1.3763 4.06%
EUR/USD 1.2315 1.2556 1.2206 2.79%
GBP/AUD 1.7821 1.7861 1.7351 2.86%
GBP/NZD 1.9048 1.9466 1.8942 2.69%
GBP/CAD 1.7709 1.7716 1.7301 2.34%

Today's Market Highlights

Things pick up pace today. UK jobs data are up first (09:30 GMT), with wage growth and the Unemployment Rate forecast to have remained unchanged in December and Claimant Count Change to have fallen in January. The impact on the pound may be relatively limited (of course, barring any surprises) as attention will largely be on this afternoon’s Inflation Report Hearings (14:15 GMT) before the Treasury Select Committee.
 
Given that the BoE took a sharply more hawkish tone earlier this month, traders will be watching for any additional guidance on the timing of the next rate hike, particularly whether one could occur as soon as this May. Hawkish signals could strengthen the pound, but Governor Carney may try to downplay expectations, which in turn could pose a risk to the pound.
 
US data this afternoon include preliminary Market PMIs ahead of the Fed’s January meeting minutes (19:00 GMT). The minutes will likely keep the Fed on track to raise rates in March, but traders will closely interpret any nuance.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:00 EUR Preliminary Eurozone Manufacturing PMI (Feb) 59.3 59.6
09:00 EUR Preliminary Eurozone Services PMI (Feb) 57.6 58.0
09:30 GBP Average Earnings Including Bonus 3M/Yr (Dec) 2.5% 2.5%
09:30 GBP Average Earnings Excluding Bonus 3M/Yr (Dec) 2.4% 2.4%
09:30 GBP ILO Unemployment Rate 3M (Dec) 4.3% 4.3%
09:30 GBP Claimant Count Change (Jan) 4.1K 8.6K
09:30 GBP Public Sector Net Borrowing (Jan) £-11.100B £0.0979B
14:00 USD Fed's Harker Speaks
14:15 GBP Inflation Report Hearings
14:45 USD Markit Manufacturing PMI (Feb) 55.3 55.5
14:45 USD Markit Services PMI (Feb) 54.0 53.3
15:00 USD Existing Homes Sales MoM (Jan) 5.61M 5.57M
19:00 USD FOMC Minutes
01:15 USD Fed's Kashkari Speaks
05:15 USD Fed's Quarles Speaks

Caxton