Article / 14 July 2016 at 7:02 GMT

Morning Markets: Focus on Brexitland and the BoE



  • UK: Bank of England Announcement & Minutes (1100 GMT)
  • Mexico: Bank of Mexico June 30 meeting minutes (1300 GMT)

Europe's leading bourses are expected to open narrowly mixed today on the heels of a cautious Asian session with the focus firmly fixed on the land of Brexit as Britain awakes to the first full day in office of its second ever female prime minister.

Despite exciting political developments – chiefly the appointment of arch-Brexiteer Boris Johnson as foreign secretary and the shuffling of Phillip Hammond over to the finance portfolio – traders will be more interested in the Bank of England monetary policy committee meeting. Mark Carney, BoE governor, is widely expected to announce an interest rate cut (perhaps as much as 50 basis points) to ward off some of the adverse effects of the UK's vote against European Union membership.  

According to the Financial Times, Bank of America Merrill Lynch is tipping a cut to 0.1% and says, bluntly: “They have nothing to gain by waiting: better to get ahead of the issue.” On the other hand, the freshly-minted chancellor of the exchequer has opted against a snap budget (such as his predecessor George Osborne flagged) telling Sky News "We’ll look carefully over the summer at the situation. I’m seeing the governor of the Bank of England this morning and we’ll take stock of where we are." Indeed, chancellor, and the rest of us will take stock of the situation at lunchtime when governor Carney takes the stage.

Finally, from the other side of the Atlantic comes news that presidential hopeful Donald Trump has overtaken Hillary Clinton in the crucial US swing states of Pennsylvania and Florida in the latest opinion poll. This causes us to wonder whether an increased likelihood (albeit still slight) that November could see The Donald voted in as president might give the Mexican central bank pause for thought. We might get a hint about current Mexican thinking in the meeting minutes due for release this afternoon...

Market signals

Asian session

  • New Zealand's business manufacturing index rose to 57.7 in June from 57.1 in May
  • Australia's inflation expectations rose in July to 3.7% from 3.5% in June
  • The country's unemployment rate came in at 5.8% with 7,900 jobs added
  • Today is a bank holiday in France for Bastille Day

Forex ahead

  • The US dollar gained ground against the yen; it was worth ¥104.4150 at 0226 GMT
  • The Aussie dollar rose on the strong employment data; it was worth 0.7627 at 0225 GMT

From the Floor

Asia momentum slows. “The rally is slowly losing steam," says Moltke-Leth

GBP lower? "We're not at the bottom of the cycle for sterling," says Hardy

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

Focus will be on the Bank of England today as Governor Mark Carney is expected to cut rates for the first time in seven years on fears the country is at risk of a recession, writes James Picerno.

Breathing space
Stocks took a breather across Asia today, taking their lead from overnight global markets, following recent strong gains, writes Singapore's Saxo trading team.


 Will it or won't it? The Bank of England is widely expected to cut rates today. Photo: iStock 

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