Rangebound Trading as US Takes a Break
As expected, the financial markets experienced and quiet and largely rangebound trading day yesterday as investors took advantage of the US holiday to keep their powder dry. FX markets were open through all the sessions as usual, but the dollar saw little change on the day with the index finishing the day close to flat. The pound did edge higher after CPI data in the UK confirmed that inflation remains sticky, although the data was largely on market expectation. Oil prices edged higher with both Brent and WTI contracts gaining 0.1% to close at $85.27 and $81.47 a barrel respectively. Gold also crept around 0.1% higher, finishing the quiet NY session at $2,330 per ounce.
“No Change” to Ring Around the Market Today – Except Maybe in Switzerland
Three major central banks are set to announce rate decisions today and like their counterparts in the US and Japan last week and in Australia on Tuesday the familiar shout of “No Change” is expected to ring around dealing floors. The People’s Bank of China and Bank of England are all expected to keep rates steady today; however, traders are expecting to see plenty of volatility in markets around the messages conveyed in statements and press conferences. There is more of a chance that the SNB will back up last months cut with another this time around as inflation is lower than their contemporaries and comments from Thomas Jordan that the rate is still restrictive would seem to back this up, however rates are comparatively lower than their peers and the bank may want to keep its powder dry given recent geopolitical issues in the Eurozone.
Famine to Feast for Traders Today
It does look like being a case of famine to feast for financial market traders today as a lack lustre calendar and US holiday that led to quiet trading conditions yesterday flips today with multiple fresh updates in the sessions ahead. The Asian session kicks off early with the focus on New Zealand with the release of the latest key quarterly GDP data, expectation is for the country to have exited recession last quarter with a slight 0.1% increase. The focus will move north to China a couple of hours later with the PBOC due to update the market on their Loan Prime rates, with expectation for the 1-year and 5-year to remain steady at 3.45% and 3.95% respectively. The London session has two key central bank rate announcements today, first up is the National Bank of Switzerland and expectation is that they will keep rates at 1.5% after their March cut. The Bank of England is also expected to keep rates steady later in the day as it continues to battle resilient inflation. US markets will resume for the last session of the day after their midweek break with stocks still sitting at record highs, Unemployment Claims data and the Philly Fed Manufacturing Index numbers will help to add to volatility as the session progresses.
