More of the same from the central banks

With no data releases from the UK yesterday we witnessed a wholly muted day of trading on the London session. Following worse than expected industrial production and manufacturing on Tuesday, Sterling suffered losses across the board, particularly against the euro - and that range held throughout yesterday reaching a low of 1.2557. Against the USD Sterling did have a short rally on the evening session as the FED minutes confirmed and end date for QE. Touching the 1.7160 mark after breaking the 1.71 support level yesterday. A look at today, a marginally busier day and although we have tier one UK releases, volatility is not expected. Occupying the lunch time slot we have the release of the BOE Interest Rate decision and Asset Purchase Facility. Both are which are not likely to be altered from 0.5% and £350bn respectively. We do, however, have the release of the UK Trade Balance numbers at 9:30am BST which has the potential to add to Sterling's woes this week, but we would have to see an abysmal figure here for it to do so.

In what was anticipated by some as a day that could have backed up the robustness of the Euro - once again, market participants were left disappointed. Mario Draghi took the stage at 7pm BST for a press conference, the same time as the FOMC minutes were released...with much speculation as to whether there was an intrinsic link in the timing. Calls have been made from the French Prime Minister of late for the ECB to weaken the currency to boost the Eurozone's exports; ears were listening for Draghi to weaken the Euro as he did last week. Much like the BOE and FED, Draghi only issued news that we have heard before; monetary policy will stay accommodative for an extended period and the ECB will go ahead and use non-standard tools if necessary. This continued what has been a quiet week on the macroeconomic and central bank influenced trading week and as we go into today there is not a great deal that we can expect from a volatility front; the ECB Monthly report release at 9am this morning, which will be scanned for clues is only likely to provide information of which we already know.

Yet another miserable day for the Greenback, despite confirming market participants forecasts correct - that they would bring QE to an end October this year should the economy continue to perform at the same pace. This was the main focus point of the FOMC minutes. Unfortunately for the USD this did not do anything to prop the currency up and thus traded back toward key lows against Sterling; further ground was also lost against the Euro despite pushing the bloc currency back toward the 1.35's this week, those gains were wiped out. The FOMC minutes did not reveal anything too different from what we already knew, the FED are not concerned by the recessionary first quarter GDP reading and the narrative again signalled strengthening for the back end of this year. Underperforming facets such as housing and subdued wage growth will continue to be monitored and without further improvement, could sway the Committee into a more dovish frame of mind going forward. As the FED begins to contemplate potential lift-off in interest rates next year; more of its resources have been geared towards making sure this goes smoothly. As such, analysis of the main tools that should enable the FED to control short term interest rates alongside a large balance sheet has ramped up. The tools include: interest on excess reserves, fixed rate fill allotment overnight reserve repo, and term deposit facility. Data from the US today comes by way of initial and continuing jobless claims - based on the aggressive employment data from the US last week a positive figure it not out of the question here by any stretch of the imagination.