• EMU PPI inflation anticipated to accelerate in June

  • Markets expect Bank of England to lift interest rates

  • DowDuPont (DWDP.US) heralded to report over $23.5 billion revenue

After Fed decided to stay on hold yesterday attention shifts to the Bank of England. The UK monetary authorities are expected to finally deliver a rate hike but one should remember that this central bank likes to surprise the markets. Apart from that, investors will be served European producers’ inflation reading as well as July’s construction PMI from the UK. A weekly piece of data from the US labour market may come in handy ahead of tomorrow’s NFP report.

9:30 am BST – UK, Construction PMI for July. Data stream coming from the UK has been lacklustre as of late. The manufacturing PMI reading for July that was released yesterday missed the expectations showing bigger-than-expected drop. According to the economists surveyed by Bloomberg agency this downward tendency is to be confirmed by the construction PMI reading today. If this is so it should not impact today’s decision of the Bank of England but it may put any further tightening under question.

10:00 am BST – Eurozone, PPI Inflation for June. After few years of PPI deflation the gauge left the negative territory at the turn of 2016 and 2017. After peaking at 4.5% YoY in early-2017 the price growth began to decelerate. Nevertheless, the inflationary pressures seem to be mounting as we have seen a decent pick-up recently. Market consensus suggest that in June the eurozone PPI inflation should accelerate to 3.5% YoY from previous 3% YoY. Do note that an extended period of rising PPI may boost CPI inflation and therefore prompt ECB bankers to consider rising interest rates.

12:00 pm BST – Bank of England interest rate decision. The interest rate hike has been announced by BoE to take place in spring. However, Brexit uncertainty as well as mixed economy picture painted by macroeconomic data forced BoE members to postpone such move. Market odds for hike during today’s meeting stand close to 90% therefore it seems like a done deal. The question remains whether it will be just a single hike or will BoE call a period of monetary tightening.

3:00 pm BST – US, Initial Jobless Claims. The weekly piece of data from the US labour market. The significance of this reading has shrinked greatly over the past years. Nevertheless, today’s reading may attract more attention than usual as it comes in between ADP employment change data released yesterday and NFP report scheduled for tomorrow. Having said that, investors may try to use this data as a hint ahead of tomorrow’s labour market report. A reading of 200k is expected.

Notable US companies reporting earnings today:

  • Activision Blizzard (ATVI.US)

  • DowDuPont (DWDP.US)

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GBPUSD has been trading in a downtrend since mid-April. The pair has reached mid term support zone ranging 1.3050-1.3130. A bounce or break will be dependant on the outcome of today’s BoE meeting and bankers’ plans for the future. Source: xStation5