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Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 14 November 2012 at 7:43 GMT

3 Numbers to Watch: BoE report, US retail sales, Fed minutes

Blogger / MoreLiver's Daily
Finland

Wednesday has room to be the week’s unofficial surprise day, with the Bank of England (BoE) releasing its quarterly inflation report, US October Retail Sales and the Federal Reserve's minutes from the Federal Open Market Committee (FOMC) meeting on October 23-24.

UK Bank of England Inflation Report (10:30 GMT) has the potential to be the biggest market mover today. The report includes the economic analysis and inflation outlook for the next two years that are used by the BoE’s Monetary Policy Committee to set monetary policy. The report is published quarterly, and given the amount of quantitative easing (QE), zero interest-rate policy (ZIRP), the Olympic-boosted GDP numbers and the latest news that according to the BoE’s own estimates, QE effectiveness has been wearing quite thin as of late, there is plenty of uncertainty on the future monetary policy. Governor King will speak immediately after the report's release. See the BoE’s website for the Inflation Report and Governor King’s Speech.

US October Retail Sales (13:30 GMT) headline figure is expected to be around -0.1-0.2 percent (prev. +1.1%) and the core excluding autos and gas to show an increase of +0.3 percent (prev +0.9%). As the October numbers are affected by the hurricane Sandy, it is disputed how much value the numbers will have.

US FED FOMC Oct 23-24 Minutes (19:00 GMT) will probably have no big surprises, as the policy of “QE to infinity” is in my opinion well-defined as it is. Given the market’s recent low risk appetite and nervousness regarding Europe, any signs that the dissenting voices are hushed and in minority, and Evans' rule is not even near could be interpreted as positives. Given the European uncertainties and Sandy, I expect dovish voices have set the tone of the meeting.

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6y
tony1 tony1
do you think the BoEs IR will shake up the cable
6y
Juhani Huopainen Juhani Huopainen
Yes - there was far too much "recession is over"-thinking after the latest round of GDP numbers, and as the rot has spread to the core EZ countries, it was hardly a surprise that outlook was kept negative. Perhaps markets were thinking too much ahead and discounting a possible ending to QE and ZIRP in UK. BoE certainly moved those expectations further down the road.

I generally believe many markets (US has discoupled! UK's recession is over! Europe is solved!) have recently gotten ahead of themselves. Other thing to watch is EURUSD - given the EUR negative headlines the pair has been very resilient.

As usual - never watch the numbers as they are - and don't even watch the numbers against the expectations. Just watch how the market reacts to differences between expected and realized. Sry about the late reply. I was afk but generally intend to answer questions after my pieces.

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