Home Flood of UK data

Today has been dubbed “Super Thursday“ in Britain as the Bank of England concluded its most recent policy meeting and simultaneously released its inflation report along with industrial and manufacturing data. The pound is under heavy selling pressure following the various releases and is pacing European markets at the moment. In anticipation, Asia was fairly quiet despite a more positive result in Australian employment data. The Australian dollar, which has been trading heavily of late, experienced extreme volatility but ultimately gained ground on the news 38.5k new jobs were added in July. Markets down under are eyeing key Chinese data over the weekend, as inflation and trade balance for July, are to be released. Here in North America, we are now less than twenty four hours away from two very important employment reports.

As we go to print this morning, the pound is under heavy selling pressure as fears of higher rates have been pushed aside and economic growth is expected to slow. Interest rates were left unchanged with only voter going for higher rates, which was on the low end of expectations. Ian McCafferty was the lone dissenter with some expecting the vote to be closer to 6-3 opposed to today’s 8-1 result. Despite higher revisions to growth, the central bank states they are anticipating the pace to slow into 2016 and fall to 2.6% from this year’s 2.8% pace. One important thing to note is the MPC’s comments on the relative strength of the pound, which could weigh on inflation for some time. The central bank noted “the drag on import prices from the appreciation will continue to push down inflation for some time to come,” dialing back expectations for many that a rate rise could soon be on the cards. Finally, it was revealed that industrial and manufacturing production growth missed loft expectations and only saw increases of 1.5% and 0.5%, respectively.

Turning toward North America, US jobless claims were better than expectations, coming in at 270k for the week ending July 31. The US dollar has been trending higher all week and continues to do so before tomorrow’s big NFP report. Yesterday, it was reported the non-manufacturing ISM beat expectations soundly showing significantly positive signs in the labor aspect of the report. Despite a lower result from ADP, showing private employers added 185k new jobs last month, the ISM print could bode well for dollar bulls as the services sector is a significant portion of the American labor market. Traders are hoping for an increase of 215k  tomorrow.

On Friday, we will also get a peek at Canadian jobs data. The Great White North is expected to report an increase of 19.3k jobs for the month of July with unemployment to be held firm at 6.8%. The CAD continues to trade lower as USDCAD once again made new 2015 highs this week. The Canadian dollar did get a slight bounce after it was reported the trade gap reduced to 0.5 billion thanks to the weaker Loonie that helped exports offset some of the losses from energy sales. Following tomorrow’s  jobs report, economic results are limited as the market will most likely focus back on the big dollar.

Further reading:

US jobless claims: 270K – around expectations

Carney copies “data dependent” phrase – GBP/USD climbs from the lows