Forex News and Events:
##################
The ECB and BoE are both meeting respectively today to discuss monetary policy. The MPC is set to keep rates the same and announce step 2 of their QE policy. Furthermore the BoE is expected to announce further GILT purchases – tapping into the remaining £75Bn of the £150Bn committed by the government.
The ECB is expected to be cutting Refi rates by 25bps down to 1.00% and announce further “non-conventional measures” (QE). The ECB is largely seen to be a laggard in dealing with the adverse affects of the global economic slowdown – China, Japan, the UK and the US all proactively cutting rates and quickly moving to quantative easing to ease credit tensions in their economies. The lack of a concerted effort on the part of the ECB countries has been detrimental to their collective push to get out of the current crisis. It is safe to say that the world will be hung on every word that ECB president Trichet has to say, the 25bp cut is already priced in – press conference starts at 11:45 GMT.
Jobless numbers in the U.S and Australia both surprised the markets. In Australia a projected decline in jobs was actually countered by a rise of 27.9K bringing unemployment down to 5.4% from a previous 5-year high of 5.7%. The AUD traded higher all day yesterday and crosses crucial resistances, heading for 0.800 against the greenback on a long-term view. The U.S ADP employment number was much lower than the markets had expected coming in at -491K instead of the projected -645K. Both these figures are a healthy sign of a slowing global economic crisis. One analyst using the seasonal metaphor to support the “Greenshoots” hypothesis as a return to the sunny spring days (in the northern hemisphere) has investors feeling better about the financial outlook of the markets in general – further proof of the positive effect of the sun on morale.
The news that will be on all headlines late today and on the front pages tomorrow is the result to the “Stress tests” carried out by the U.S Treasury. It has already been widely reported that BofA will necessitate $34Bn in refinancing but that none of the 19 banks tested are at risk of insolvency. Since the announcement that results had been pushed back from the 4th to the 7th the pertinence and credibility of the test.
