It’s another highly busy day in the financial markets today, with the biggest news coming from the United Kingdom where the Bank of England is holding its monthly monetary policy meeting.
Due to the recent increase in inflation in the UK, investors had expected that more economists within the Bank of England would switch to a hawkish mindset and support an interest rate hike sometime soon.
However, the BoE offered those people a nasty surprise, with only two (instead of three) members of the Bank of England voting in favor of a rate hike, with seven still firmly opposing it.
Asset purchases were also left unchanged at 875 billion pounds. The overall conclusion from the Bank of England’s meeting is that the regulator is still not ready for the hawkishness the markets had hoped for. This, in turn, weakened the British pound against other major currencies.
In other news, the services and composite PMI reports for October continue today. The services sector did better than expected in Spain, but narrowly missed the forecast in Italy, with composite indices in both EU member states slightly lower than last month’s. In Germany, both reports met the forecast levels exactly.
The eurozone-wide composite PMI was a bit of a disappointment, coming in just short of the forecast (54.2 vs 54.3).
Later today we are going to get the balance of trade report for September from Canada. In addition, the United States will publish its latest jobless claims data.
Meanwhile, the markets are still digesting the results from yesterday’s monetary policy meeting of the Federal Reserve. The regulator initially disappointed investors by confirming that it is too early for a rate hike, but now market participants seem pleased that at least the Fed committed to tapering its asset purchases starting from this month.
The dollar index today rose to 94.26 and the USD is strengthening against other currencies.
In addition, there is also an OPEC+ meeting today, but no changes to the current quotas are expected for December. The petroleum-exporting countries seem excited to keep supply limited, seeing how it’s allowed crude oil prices to rise in recent months.
