Summary:
- BoE hike rates for the first time since 2007
- Hike seen as dovish however with GBP tumbling and UK100 surging higher
- Recent Bitcoin rally extends as price break above $7000
- GOP tax plan announced and Powell closes in on Fed chair
- Choppy day for the USD and Gold remains finely poised
- SPA35 pulls back. PM Rajoy popularity on the rise
The Bank of England chose to raise interest rates by 25 basis points to 0.5% as expected keeping its monetary stimulus (the QE program) in place. The pound jumped in a knee-jerk reaction, however it abruptly made a U-turn. By the time of the European close the pound was down strongly against all its major peers, with the move clearly being seen by the markets as a dovish hike.
The press conference from Governor Carney and fellow MPC members saw little by the way of fresh developments, with the damage to the pound seemingly already done. Carney described the decision as taking the foot off the accelerator and the overall tone was fairly balanced, arguably erring on the dovish side.
Bitcoin has gone nuts one again as the price has already touched an astounding $7000 following an announcement from the CME (Chicago Mercantile Exchange), the world’s largest options and futures exchange. The company released a report on Tuesday that it would launch trading in Bitcoin futures by the end of the year.
The much vaunted GOP tax plan has been publicised this afternoon with the main news being that the corporation tax is planned to be immediately lowered to 20% from the current 35% rather than phased in as was reported earlier this week. The release saw an initial drop in the US dollar before a recovery occurred.
Gold was also sensitive to the news with some fairly volatile trade seen in the precious metal. Reports that Powell is set to be unveiled as the next Fed chair also saw some decent moves with Gold moving above 1280 before falling back. The official announcement is scheduled to be at 7pm BST. A technical overview of Gold can be found here.
Whilst it may be a little premature to declare the Catalonia crisis over for Spain, there is a growing feeling that the worst is passed with the central government taking direct control of the region and former President Puigdemont fleeing to Belgium. There’s been some notable weakness in the SPA35 today, with the benchmark falling back to retest a key level at 10395.
There have been some notable moves in US stocks in the past week with earnings releases seeing a significant impact on shares of Amazon, Alphabet, Facebook and Tesla. Tonight, the biggest publicly traded US company of them all will provide a trading update with Apple set to post their Q4 results shortly after the closing bell.