Once again, central bankers drive the market

Today's Highlights

• US rate cut a distinct possibility

• Eurozone inflation picking up

Current Market Overview

US rate cut a distinct possibility

Two central bankers were in the news yesterday. The US Federal Reserve released its meeting minutes showing a clear propensity to lower their base rate amongst the members of the Open Market Committee. The US Dollar weakened a little on the news but is still down at $1.2540 against the Pound and $1.1270 against the Euro. We will have speeches from a number of FOMC members later today which ought to reinforce the message from the meeting.

The Bank of England publishes its financial stability report this morning. That sounds kind of euphemistic in the current environment where everything is anything but stable. It’ll make interesting reading though.

Eurozone inflation picking up

This morning brought a rise in French and German inflation. Fundamentally that is a positive for the Eurozone but it isn’t a local phenomenon. We are seeing rising inflation at the producer and consumer level in areas around the globe, so it is unlikely to prompt a rate hike from the European Central Bank any time soon. There will be comment from some members of the ECB through the day to keep us ‘informed’.

This afternoon will bring US inflation and initial jobless claims as well as the 2nd day of the Federal reserve Chairman’s testimony to the Joint Economic Committee, in Washington DC. He will say the same as he said yesterday.

Later this evening we will hear from yet another central banker; the Assistant governor of the Reserve Bank of Australia and then the purchasing manager’s index from New Zealand. That should keep the late traders busy.