Daily Alert: Friday 16th September 2016

Mark NugentDaily Alert, Sept 2016

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Forex Analysis for Friday 9th September 2016
Economic Calendar

US Retail Sales beat expectations (-0.2% vs -0.4%) and the prior number was revised upwards from 1.4% to 1.9%. The Bank of England kept interest rates unchanged and as expected at 0.25% with a unanimous vote. Similarly, the Asset Purchase Facility (QE) remained unchanged at £435B, also voted for unanimously. The meeting minutes stated:

The Committee’s view of the contours of the economic outlook following the EU referendum had not changed. News on the near-term momentum of the UK economy had, however, been slightly to the upside relative to the August Inflation Report projections. The Committee will assess that news, along with other forthcoming indicators, during its November forecast round. If, in light of that full updated assessment, the outlook at that time is judged to be broadly consistent with the August Inflation Report projections, a majority of members expect to support a further cut in Bank Rate to its effective lower bound at one of the MPC’s forthcoming meetings during the course of this year. The MPC currently judges this bound to be close to, but a little above, zero.

Finally, US Core Retail Sales missed (-0.1% vs 0.3%).

Market Reaction

All major equity markets were up on the day. Bond yields “paused”. Oil was flat at weekly lows. The USD reacted badly to the CPI number but quickly recovered. However, the FedWatch tool has the next Fed rate hike slipping back to March next year. The JPY continues its modest strengthening path. The GBP continues to respect resistance as does the CAD, AUD and NZD.

Media

A focus on the EU Bratislava Summit. Merkel saying “EU survival at stake.” Bank of England Monetary Policy Committee present optimistic view of how the market has reacted to its stimulus.

Today

Today we have US Core CPI. The Fed’s preferred measure, PCE, is published on 30th September.

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