News

Pound Holds Steady, BOE in Focus

GBP

The British pound was almost flat against rivals as investors anticipate the Bank of England monetary policy meeting. The bank is widely expected to keep interest rates unchanged. However, there are expectations for the bank to kick off tapering asset purchases. The weekly asset purchases are around 4.4 billion pounds per week, at this stance, the Bank of England will exceed its limit of 875 billion before year-end. This gives the bank room to taper purchases, but the key question remains whether the taper will happen today, or in the next meeting. The economic data from the United Kingdom are coming in better-than-expected to translate the success of the vaccination plan in reopening the economy. The GBPUSD is holding near $1.39, and the GBPJPY is trading near 152.

USD

The dollar index which measures the greenback against a basket of major currencies slipped to 91.15 as investors await key data. The US Treasury yields are fluctuating in a tight range, keep the dollar range trading in check. The ISM non-manufacturing and ADP nonfarm employment change missed estimates, adding to the dollar pressure. But investors are waiting for the April jobs report that will be published tomorrow, for a clearer insight into the labor market recovery. Any disappointments could send the dollar and yields tanking. The USDJPY is trading at 109.35, and the EURSD inched higher to $1.2030.

Equities

Major US stock futures indices marched higher during the Asian session. The rotation between sectors has been clear lately, with the Dow Jones Industrial Average futures outperforming the S&P500 and the tech-heavy Nasdaq. Investors will look forward to additional economic data, after a slight miss from the recent releases. The Dow Jones Industrial Average futures rose to 34216, the S&P500 futures rebounded to 4173, and Nasdaq futures recovered to 13568.

Metals

Precious metals prices inched higher as the dollar retreated along with yields after soft data. The price of a gold ounce rallied to $1795 recovering from the losses incurred after Yellen's comments on rates. The price of a silver ounce hovered near $26.70, while palladium eased to $2968.

Oil

Oil prices recovered partially from yesterday's declines. The overall optimism over the economic recovery in the United States and Europe is supporting the general upside movement. The US Energy Information Administration reported a drop of 7.990 million barrels in US crude oil inventories. The West Texas Intermediate crude June futures rose to $65.91, and the Brent blend rallied to $69.33.

Major Economic Events

GMT Country Event Expectation Previous

8:30

UK

 Services PMI (Apr)

60.1

56.3

9:00

EZ

 Retail Sales (MoM) (Mar)

1.5%

3.0%

11:00

UK

 BoE Interest Rate Decision (May)

0.10%

0.10%

11:00

UK

BoE QE Total (May)

875

875

11:15

EZ

 ECB President Lagarde Speaks 

-

-

12:30

US

 Initial Jobless Claims

540

553

 

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