Summary:

  • Final services PMI from European economies and the UK
  • Bank of England meets to set monetary policy
  • Czech National Bank is expected to rise rates
  • US non-manufacturing ISM could steer expectations ahead of the NFP

The Bank of England meeting should be in the limelight today even as the broad consensus suggests that rates will be held unchanged. Since the last BoE’s gathering there have been softer inflation prints which could trim expectations regarding an immediate rate hike. Moreover, the US non-manufacturing ISM should draw attention as well.

9:30 am BST – UK services PMI: There is no doubt that today’s print is unlikely to have any impact on the BoE’s decision in August, however it could show how the most important sector in the British economy actually looks like. There were two PMI releases earlier this week. Manufacturing PMI surprised to the upside, albeit yesterday’s construction reading turned out to be much weaker than estimated suggesting a further deterioration in construction output going forward. Therefore, the services reading could be seen as a precursor for retail sales. The official consensus indicates a 53.5 rise. Besides, there will be final prints from other European economies.

12:00 pm BST – Bank of England meeting: The pound has thrived against the greenback of late even as the macroeconomic data has worsened to some extent. The Bank of England could have a hard nut to crack as on the one side expectations for a hike seem to be quite elevated as the MPC voted 5-3 for leaving rates on hold during the last meeting, on the others side though, inflation growth slowed down in the prior month, which could cool down the MPC’s members. Along with the decision, there will be the inflation reports as well as a press conference of governor Carney 30 minutes later. The consensus did not assume any changes in rates or the asset purchase program.

12:00 pm BST – Czech National Bank decision: When the CNB decided to remove a cap on the EURCZK a few weeks ago, the Czech koruna strengthened to some extent but the move was not so impressive as in case of the SNB. The CNB is expected to rise the main interest rate by 10bps at today’s meeting from 0.05%. Given that the EURCZK remains quite low despite a rally seen in the euro against its G10 major peers, one could assume that market participants could want to sell the EURCZK again. When the CNB hikes rates today, it could slightly increase the CZK’s appeal in the money market.

US jobs data (Challenger job-cut report at 12:30 pm BST and weekly jobless claims at 1:30 pm): Admittedly, there are no big market movers, taking into account vulnerability of the greenback to any macroeconomic readings (even those having a marginal impact, on the face of it) they could be worth looking at. Moreover, market participants might treat them as more important as the labor market appears to be still the brightest spot in the US economy.

3:00 pm BST – US non-manufacturing ISM and durable goods (final): As far as the US dollar is concerned, the most relevant reading should come down to the non-manufacturing ISM which could give a hint with regard to tomorrow’s NFP. Furthermore, the price sub-index could be closely tracked as well as inflation trend hasn’t gathered momentum as of yet. The consensus points to 57 compared with the prior reading at 57.4. In addition, there will be a final reading of US durable goods orders where projection indicates a 6.5% mom increase.

link do file download linkThe EURCZK has carved out a strong support in the vicinity of 26. If the CNB didn’t hike rates today, it could lead to an upward move towards 26.3. Source: xStation5