Against a backdrop of currency weakness, the Bank of England will be holding a policy meeting today and is expected to keep its interest rate unchanged.
- The Bank of England has a policy meeting scheduled today. It is expected that the Bank will vote to keep its interest rate unchanged at 4%. There is some speculation of a surprise rate cut, as the British economy is not performing well, but UK inflation remains higher than desired, which is a factor against such a cut. A minority of 3 members is expected to vote for a cut. Even if there is no cut, if 4 or 5 vote for a cut, that will be a dovish tilt from the Bank which would likely cause the Pound to fall further. The GBP has recently been one of the weakest major currencies, and although the GBP/USD currency pair has found some support around the round number at $1.3000, it has room technically to fall quite easily to $1.2700.
- Yesterday's ADP US jobs data survey showed that instead of shedding $29k net jobs last month, it is likely that $42k net jobs were created. Federal Reserve Governor Miran welcomed this and called for a December rate cut, though there is no logical connection between the two. The data caused a moderate bounce in stock markets and a small dip in the US Dollar. The CME's FedWatch tool now shows a 63% chance of a 0.25% rate cut at its next meeting on 10th December, which is unchanged over recent days.
- President Trump forecasted that Q3 data for 2025 will show US GDP growth at an annualised rate of 4.2%, which would be relatively high.
- Japanese data released a few hours ago showed that real wages have fallen overall for the ninth consecutive month. This lowers the prospect of a rate hike, which depends upon a rekindling of inflationary pressure. This can be expected to contribute to weakness in the Japanese Yen.
- In the Forex market, we have seen a quiet Asian session, with negligible directional price movement. The USD/JPY currency pair remains in focus after triggering a long trade entry at most trend-following funds three weeks ago and is looking more bullish after rising to trade near ¥154.00. Trend traders will still want to be long here, and momentum traders will be looking for a bullish breakout.
- Soybean futures are trading near a 4-month high price, which is attracting some trend followers to trade it long. Soybeans got a boost last week when China agreed to resume purchases of US soybeans. If Soybean futures are too big and expensive for you, you could consider the more accessible and affordable ETF SOYB if you want exposure.
- Bitcoin continues to look weak, threatening to make a new 4-month low price near the big round number at $100,000. T A sustained break below $100,000 might trigger an even sharper fall, although this area might also act as support and see buyers step in.
- Yesterday's release of US ISM Services data came in better than expected, suggesting a more buoyant economy than expected.
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