Thursday September 13, 2018 - 14:44:16 GMT
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ECB Steady; Draghi Less Dovish. Bank Of England Steady.
ECB Steady Policy; But Draghi Turns Hawkish Bank Of England Holds Policy Steady.
John M. Bland, MBA, co-founder, Global-View.com
ECB Keeps Policy On Hold, but Draghi Decidedly Less Dovish As expected Thursday, the ECB kept its seven day refinancing rate steady at 0.0% and its Marginal Lending Facility Rate unchanged at -0.40%. The bank reiterated that it expects key interest rates to remain at current levels until the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term. Despite some slight adjustments to ECB staff economic forecast, President Draghi took a more upbeat tone on the economy. The ECB cut its 2019 GDP growth forecast from 1.9% to 1.8%. It also maintained its 2018 and 2019 inflation forecasts at 1.7% Staff economists cut the 2019 GDP forecast due to weaker external demand. In general, Draghi focused on strong internal growth as being the fundamental positive for the Euro-zone. The EUR has responded positively to these developments.
As expected, The Bank Of England Leaves Policy Steady. There was never any chance that the Bank of England would change policy on Thursday. The vote was 9-0 in favor of no policy change. The consensus view is that the central bank will not change rates until after a Brexit deal with the EU. At that time the 0.75% Repo Rate is expected to be increased by 25bps, assuming that economic conditions are appropriate.The central bank continued to say rate changes will be “limited and gradual”. Current street expectations are for the next rate hike in May 2019. Negotiations about Brexit continue to dominate trading. The deadline for an agreement is March 2019. There is also a cloud hanging over the future of PM May within her ruling Conservative Party. A party leadership challenge is possible heading into year-end. Al these uncertainties have become a weight of the value of the GBP vs. the USD and especially the EUR.
GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium
Mon 17 Sep 2018
All Day- JP Holiday
A 09:00 EZ- HICP
Tue 18 Sep 2018
No Major Data
Wed 19 Sep 2018
AA 03:00 GB- Bank of Japan Decision
AA 08:30 GB- CPI
A 12:30 US- House Permits/Starts
B 12:30 US- Current Account
A 14:30 US- EIA Crude
Thu 20 Sep 2018
AA 06:30 CH- Swiss National Bank Decision
AA 08:30 GB- Retail Sales
A 12:30 US- Philly Fed/LEI
A 12:30 US- Weekly Jobless
A 14:00 US- Existing Homes Sales
Fri 21 Sep 2018
AA 12:30 CA- CPI/Retail Sales
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