Daily Market Update 23/09/2021

Markets

GBP

Sterling is stronger than most majors in the early morning trade. Britain’s central bank looks set to keep interest rates steady later on Thursday as it approaches the end-point of its 895 billion pound ($1.22 trillion) asset purchase programme and casts a wary eye over surging inflation pressures. Investors will be keen to see if more Monetary Policy Committee (MPC) members join external member Michael Saunders who voted in August to halt the current year-long programme of asset purchases, which the Bank of England committed to last November. The BoE is ahead of other major central banks in planning to stop quantitative easing by the end of this year, and half its policymakers judged in August that some preconditions for an interest rate rise had already been met.

EUR

The euro is significantly higher than the dollar and slightly lower than the pound this morning. The far-right SPD party, which may play a role in forming a new Czech government next month, would demand the cabinet propose legislation that could lead to a referendum on leaving the European Union, party chief Tomio Okamura said on Wednesday. “One of the fundamental conditions is for the government manifesto … to include a referendum law including the possibility of a referendum on leaving the EU or potentially NATO,” Okamura told reporters after meeting President Milos Zeman, whose role will be to moderate post-election negotiations and appoint the prime minister. The SPD has promoted leaving the EU and an EU exit referendum for many years. An opinion poll by the CVVM agency in July showed 66% of Czechs supporting EU membership, while 28% said the country should not be in the EU.

USD

The dollar is lower than most majors overnight. The Federal Reserve is on the cusp of paring back its huge support for America’s economy as officials at the central bank prepare to raise interest rates as soon as next year. A reduction in the Fed’s $120 billion monthly bond buying programme “may soon be warranted”, it said tonight, as the world’s largest economy continues to recover. Jerome Powell, chairman of the Fed, said officials believe a “gradual tapering process” concluding by next summer is “likely to be appropriate” providing the recovery remains on track. It could launch the process at its next meeting in November. The dot plot, in the central bank’s newly released economic forecast for the next few years, showed a rate hike in 2022 because it averages all 18 forecasts on where interest rates would end up.

Ballinger & Co. Morning Report–23rd September 2021

Today’s Rates

GBP>EUR – 1.1654

GBP>USD – 1.3661

EUR>USD – 1.1722

GBP>CAD – 1.7299

GBP>AUD – 1.8793

GBP>SEK – 11.818

GBP>AED – 5.0187

GBP>HKD – 10.634

GBP>ZAR – 20.035

GBP>CHF – 1.2628

Today’s Calendar           

·       EUR      Markit Manufacturing PMI(Sep)

·       EUR      Markit PMI Composite(Sep)

·       CHF       SNB Interest Rate Decision

·       CHF       SNB Monetary Policy Assessment

·       EUR      Markit PMI Composite(Sep)

·       GBP      Markit Services PMI(Sep)

·       GBP      BoE MPC Vote Rate Unchanged

·       GBP      BoE Asset Purchase Facility

·       GBP      Monetary Policy Summary

·       GBP      BoE MPC Vote Rate Cut

·       GBP      Bank of England Minutes

·       GBP      BoE MPC Vote Rate Hike

·       GBP      BoE Interest Rate Decision

·       CAD      Retail Sales (MoM)(Jul)

Today’s Highlights

·       Forex Today: Dollar drops with yields in Fed’s aftermath, Evergrande risks loom, BOE to hint at taper? Fed to wait until November for taper announcement – CNBC survey

·       GBP/USD Forecast: Bounces off 1.3600 pivotal support, focus shifts to BoE

·       UK Preliminary Manufacturing PMI misses estimates with 56.3 in Sept

·       Bank of England Preview: Action to revolve around tapering prospects

  (https://frank-exchange.com/)

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