BANK OF ENGLAND POLICY MEETING TAKES CENTER STAGE
A high-profile meeting of the Bank of England (BOE) will dominate the headlines on Thursday, giving stock and currency traders the latest reading on monetary policy. Although the central bank is not expected to raise interest rates, the official statement could shed light on the future path of monetary policy.
The European calendar picks up at 07:00 GMT with a report on German trade. Europe’s largest economy is expected to post a trade surplus of €21.7 billion in December, down from €22.3 billion. Exports are forecast to fall 1% month-on-month, following a 4.1% increase in November. Meanwhile, imports are expected to decline 0.5% from November.
Later in the morning, the European Central Bank (ECB) will unveil the latest Economic Bulletin, which provides a broad overview of the major trends impacting the currency region.
The BOE policy meeting will end in a rate statement at 12:00 GMT. The benchmark interest rate is forecast to hold steady at 0.5%, with the asset purchase facility also unchanged at £435 billion. Bank of England policymakers voted to raise interest rates in November for the first time in more than a decade in an attempt to cool surging inflation.
Elsewhere on the policy docket, US Federal Reserve Bank of Dallas President Steven Kaplan will deliver a speech at 09:50 GMT. Federal Open Market Committee (FOMC) member Patrick Harker is also scheduled to speak later in the day, as is Neel Kashkari of the Minneapolis Fed.
In terms of US data releases, the Department of Labor will issue its weekly jobless claims report for the period ended 2 February. The number of Americans filing for first time unemployment benefits is projected to rise by 2,000 to a seasonally adjusted 232,000.
Europe’s common currency sunk to fresh two-week lows on Wednesday, as the US dollar rose across the board. The EUR/USD exchange rate recovered somewhat overnight, climbing 0.1% to 1.2272. The pair faces immediate resistance at 1.2310, followed by 1.2360. On the opposite side of the ledger, key support is located at 1.2255.
Cable is coming off a volatile session, as prices fell sharply below the 1.3900 handle. The GBP/USD exchange rate was last seen trading at 1.3888, where it was up 0.1% from the previous close. The pair faces immediate resistance at 1.4000, a key psychological threshold.
The dollar failed to extend its broad rally to the yen on Wednesday, with the USD/JPY fluctuating within a narrow range. The pair was little changed in Asian trading, as it held around 109.28. Immediate resistance is located at 109.75, followed by 110.05. On the opposite side of the spectrum, support is located at the 109.50 level, followed by 108.85.