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Market Review : Bank of England Interest Rate Decision

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Market Review : Bank of England Interest Rate Decision

Market Review : Bank of England Interest Rate Decision

Economic calendar (highest volatility): 5th February– 9th February 2018:

Timezone: (GMT -5:00) Eastern Time (U.S & Canada), Bogota, Lima

Fundamental:

The United States (U.S) Nonfarm payrolls (NFP) for January 2018 released last Friday turned out to be largely positive adding on 200,000 jobs, ahead of average market expectations of 180,000. In addition to this, while the unemployment rate for January 2018 remained steadily in line with the average market expectation of 4.1%, the team at FintechFX would like to note that annualized wage growth touched a long term high; last outpaced almost a decade ago. The U.S Federal Open Market Committee (FOMC) tone remains largely positive on having three interest rate hikes this year in light of supporting economic data. Given the recent positive U.S economic data readings, there seems to be rising market concerns for these planned interest rate hikes to take place faster. This has caused American equity markets to take a slight hit post last week's positive U.S NFP data, with the S&P500 index falling by 2.12% and the Dow Jones Industrial Average falling by 2.54%. 

In respect to this week in particular, the team here at FintechFX note on three very crucial interest rate releases which can stand to bring about the most volatility in regards to the financial markets. These interest rate decisions concern the Reserve Bank of Australia (RBA), the Reserve Bank of New Zealand (RBNZ), and the Bank of England (BoE); all which are expected to release statements which lean towards a more hawkish bias, following better overall economic footings in these respective economy for example; post-Brexit negotiations in the United Kingdom and 'currency low' periods in Australia and New Zealand following the two years prior to 2018. 

Technical:

This week, the AUD/USD presents traders with some trading volatility this week as an Interest Decision looms close (due this Tuesday, as indicated in the economic calendar above). The U.S Dollar Index has largely weakened upon the start of 2018, contributing towards the strong uptrend visible in the AUD/USD chart below. In the light of a potentially more hawkish statement, markets are looking at the AUD/USD to regain some of it's strength lost during last week's U.S NFP release. 

Almost similar to the AUD/USD, the NZD/USD presents traders with some trading volatility this week as an Interest Decision looms close (due this Wednesday, as indicated in the economic calendar above). The U.S Dollar Index has largely weakened upon the start of 2018, contributing towards the strong uptrend visible in the NZD/USD chart below. In the light of a potentially more hawkish statement, markets are looking at the NZD/USD to regain some of it's strength lost during last week's U.S NFP release. 

 

The GBP/USD can easily be crowned as one of 2018's star performer; the pair is seen to have recouped much of it's post-Brexit losses, as indicated in the strong uptrend visible in the chart below. The GBP/USD has managed to sustain around the 1.40 level and a more hawkish statement or any positive amendment in policy could drive the GBP/USD back up by 200 pips to the 1.42 price level once again. 

 

Source (Charts): https://www.investing.com

Source (Economic Calendar): https://www.forexfactory.com/calendar.php

Contact Us: [email protected]

Economic Calendar by TradingView

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