10 MAY: BOE TAKES THE STAGE
Economic data and monetary policy will draw headlines on Thursday, with none more noteworthy than the Bank of England’s interest rate decision. The BOE is widely expected to stand pat on monetary policy this month but could provide important information about the pace and timing of future rate adjustments.
The European session kicks off at 08:00 GMT with a report on Italian industrial production. Factory output in the Eurozone’s third-largest economy is forecast to grow 0.4% in March after falling 0.5% the month before.
Britain’s Office for National Statistics will report on manufacturing production, industrial production and trade at 08:30 GMT. Manufacturing output is forecast to rise 2.9% annually in March. Industrial output is projected to grow 3.1% over the same period.
London’s goods trade deficit with the rest of the world is expected to grow to £11.25 billion from £10.2 billion.
The BOE rate decision will be announced at 11:00 GMT via Monetary Policy Summary that will be posted on the Bank’s official website. The main interest rate is forecast to hold steady at 0.5%. The asset purchase facility is also expected to remain unchanged at £435 billion.
Shifting gears to North America, the Department of Labor will release a pair of closely watched reports on Thursday, including weekly jobless claims and the April consumer price index (CPI).
Consumer inflation in the world’s largest economy likely rose 0.3% month-on-month, which translates into an annualized gain of 2.5%. Excluding food and energy, CPI likely rose 2.2% year-over-year.
North of the border, Statistics Canada will report on the new housing price index at 12:30 GMT. New home values in Canada are forecast to have flatlined during March after slipping 0.2% the month before.
Washington’s Financial Management Service will wrap up the Thursday session with the monthly budget statement.
Europe’s common currency bounced from a double-bottom formation on Tuesday, although the underlying picture remains firmly rooted to the downside. EUR/USD is currently trading at 1.1864, having declined some 500 pips from three weeks ago. US CPI data on Thursday should provide the next catalyst for the trade.
Cable will look to UK data and BOE policy for direction on Thursday. GBP/USD is now trading at 1.3555, with prices somewhat stabilizing following a prolonged downtrend. The pair continues to face strong resistance up ahead at 1.3600. On the downside, the psychological 1.3500 level provides a key barrier of support.
USD/JPY has snapped back to health after a tumultuous start to the week. The pair is back to trading in the 109.66 region, with the bulls eyeing a re-test of the 110.00 level. Traders can expect resistance at the psychological price point. On the flipside, immediate support is located at 109.20.