The Federal Reserve plans to ‘taper’ bond purchases, winding back a $120bn-a-month stimulus programme as the US economy contends with surging inflation. Fed officials agreed to wind down their $120-billion-a-month asset-purchase program by $15 billion each in November and December, a pace that could phase out the purchases entirely by next June. Fed Chairman Jerome Powell said officials had pulled forward, relative to market expectations earlier this year, the potential end-date for the bond-buying program in case they decide they need to raise interest rates next year to cool down the economy if inflationary pressures broaden.
Financial markets are confident the Bank of England will tighten monetary policy by at least 0.15%, raising the base interest rate. Many predict the UK will become the first leading central bank to begin a series of interest rate rises to nip inflationary pressure in the bud. With new BoE forecasts expected to show inflation rising above 5% next year and exceeding its 2% target for longer than previously anticipated, traders in money markets are convinced the central bank will at least raise interest rates from 0.1% to 0.25%, with many expecting a bigger move. Economists are less sure the BoE Monetary Policy Committee will vote for a rate rise, but many have shifted their views over the past month after a series of aggressive messages on inflation from central bank officials.
Sterling is higher against the euro and lower against the dollar in overnight trade. More than 40 countries are committing to shift away from coal, in pledges made at the COP26 climate summit, the UK government says. Major coal-using countries including Poland, Vietnam and Chile are among those to make the commitment. But some of the world’s biggest coal-dependent countries, including Australia, India, China, and the US, did not sign up to the pledge. Britain and France are hoping to strike a deal today to de-escalate the increasingly acrimonious row over post-Brexit fishing rights. A British-owned ship seized last week in Le Havre by French authorities was released Wednesday.
The euro is lower against most majors overnight. Christian Lindner, leader of Germany’s liberal FDP party and a contender for the job of finance minister in the next government, said Wednesday he was open to discussing proposals to adapt EU fiscal rules. Talks to revive the stalled Iran nuclear deal, aka the Joint Comprehensive Plan of Action, will resume on November 29 in Vienna. The EU’s Enrique Mora will chair the talks, and representatives from China, France, Germany, Russia, and the U.K. — as well as Iran — will attend. A questionable online campaign by the Council of Europe, which is partly funded by the European Commission, has caused major political outrage in France. The campaign ran slogans seemingly promoting the Hijab for young women on Twitter, before the content was pulled after spokespeople for the Council of Europe stated they would think about a better method of presentation.
The dollar is higher against most majors in early morning trade. House Democrats released an updated version of the party’s social spending and climate package, adding back a paid-leave program that had previously fallen out of the bill and including a measure sharply raising the $10,000 cap on the state and local tax deduction. Democratic New Jersey Gov. Phil Murphy held on to his office in a race that ended up much closer than the polls had suggested before Election Day. Mr. Murphy fended off Republican Jack Ciattarelli to become the first Democrat since 1977 to win re-election as governor. The Associated Press declared Mr. Murphy the winner on Wednesday evening, when the Democrat was ahead by about 19,000 votes out of more than 2.4 million ballots cast.
Ballinger & Co. Morning Report–04th November 2021
GBP>EUR – 1.1796
GBP>USD – 1.3627
EUR>USD – 1.1548
GBP>CAD – 1.6915
GBP>AUD – 1.8364
GBP>SEK – 11.683
GBP>AED – 5.0050
GBP>HKD – 10.603
GBP>ZAR – 20.836
GBP>CHF – 1.2442
· AUD Trade Balance (MoM)(Sep)
· GBP Bank of England Monetary Policy Report
· 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
· GBP BoE’s Governor Bailey speech
· EUR ECB’s President Lagarde speech
· Forex Today: Dollar holds its ground as Fed tapers, eyes on BOE, mid-tier US data
· GBP/USD drops towards 1.3650 ahead of BOE rate decision, Brexit talks
· BOE Preview: Guide to trading critical Super Thursday with GBP/USD, in three stages
· German Factory Orders rebound 1.3% MoM in September; miss estimates
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