UK Employment figures & Bank of England Minutes at 9.30

Today's Highlights

Kiwi drops on poor inflation numbers

FX Market Overview

The New Zealand Dollar extended yesterday’s drop last night as it failed to benefit from the global dairy auction and prices for consumers fell by 0.2% in the last quarter of 2014. While that may be good news to consumers, low inflation will weigh on the RBNZ to consider lowering interest rates in the coming months. At half past 9 this morning the Bank of England release their minutes from January’s monetary policy meeting. The7-2 split vote on keeping interest rates where they are should remain however, BoE Governor Mark Carney is likely continue preparing U.K. households and businesses for higher borrowing costs as the on going improvement in the labor market fuels expectations for a faster recovery. UK employment numbers are out at 9.30 as well- UK jobless claims are expected to contract for the 26th consecutive month, falling by 25k and the unemployment rate expected to fall below 6%. Better jobs data coupled with wage growth (weekly earnings expected to pick up for the fifth consecutive month) should see sterling extend the gains it started yesterday.

And the rumour mill is already churning ahead of the ECB meeting tomorrow. Ewald Nowotny a member of the European Central Bank’s governing council has been on the wires saying that tomorrow’s meeting will be interesting but not to get too excited about it... Take from that what you will, but expectations for the meeting are running high. The ECB’s balance sheet has not seen the upward momentum that policy officials have previously strived for, in hopes that some form of inflation will return. Market participants are perhaps not too concerned with the initial size of the ECB’s program but rather what the explicit balance sheet target is and a focus on a return to the early-2012 levels; roughly €2.6 to €3.1trillion, seems to be the main consensus. The last 7 days for the euro have been turbulent to say the least and with heavy speculation around this meeting is already under way there should be good opportunities for both buyers and sellers of euros so place your market order accordingly.

The Bank of Canada interest rate decision is this afternoon at 1pm but should be a non-event as they should leave rates on hold at 1%.

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