Bank of England makes no changes in monetary policy – Binary Options Daily Review

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Friday 17th March 2017
Prepared by Barry Jenkins, MarketsWorld Binary Options Analyst

 
Market Index Closing Level Move on day Intraday Market Range
CAC 5,013.38 + 27.90 5,004.62 – 5,031.57
DAX 12,083.18 + 73.31 12,046.10 – 12,156.40
Dow Jones 20,934.55 – 15.55 20,893.50 – 21,000.10
FTSE 7,415.95 + 47.31 7,368.64 – 7,444.62
IBEX 10,168.00 + 78.10 10,063.70 – 10,175.30

Closing Markets Summary

Dow Jones

Stocks in the US closed slightly lower on Thursday as falls in healthcare and utility shares weighed along with volatile oil prices which weighed on energy shares. Stock markets rallied on Wednesday after the Federal Reserve raised interest rates by a quarter-point. The central bank’s anticipated path of future rate hikes was seen as less hawkish than had previously been expected by market participants, giving an initial boost to equities. Crude-oil prices settled down 0.2% at $48.75 per barrel, following an earlier jump of about 1% due to weaker Dollar, on renewed oversupply concerns. The Dollar dropped roughly 1% after the Fed announcement and continued move lower on Thursday. Economic data showed that weekly jobless claims fell by 2,000 to 241,000 in mid-March, as layoffs remained near the lowest level in decades. The Federal Reserve Bank of Philadelphia’s monthly index on regional manufacturers fell to 32.8 in March from 43.3 in February—the highest reading in 33 years, according to data released Thursday. Companies that featured included Oracle Corp. which moved up 6.6% after the software giant late Wednesday reported fiscal third-quarter earnings above expectations. GoPro Inc. rallied 14% after the sports camera maker late Wednesday announced job cuts and said it expects to be profitable on an adjusted basis in 2017. Guess Inc. fell 12% after its late-Wednesday earnings report missed markets forecasts. Williams-Sonoma Inc. rose 2.3% after the retailer late Wednesday reported earnings that beat forecasts and raised dividends. Dollar General Corp. rose 1.9% after the discount retailer reported fiscal fourth-quarter profit and sales that beat forecasts. Snap Inc. slipped 4.2% and slipped below $20 for the first time since its public debut earlier in the month. The stock of the message company hit a high of $29.44 on March 3. The S&P 500 closed down 3.88 points at 2,381.38. The Nasdaq Composite, after briefly trading above its previous closing high, gave up gains, to finish virtually unchanged at 5,900.76, up 0.71 of a point. The Dow closed down 15.55 points at 20,934.55.

Europe

European equity markets closed higher on Thursday to end at their strongest levels in more than a year. Sentiment was buoyed by a rally in mining shares and relief after Dutch voters rebuffed Geert Wilders’s far-right party in a general election. The Pan-European Stoxx Europe 600 index rose 0.7% to close at 377.73, its highest close since December 2015. In Amsterdam the AEX rose 0.6% to 514.53, to record its best close since January 2008. The move came after the far-right Party for Freedom, led by Wilders, fell short in the Netherlands general election. Preliminary results released late Wednesday showed that the Dutch political establishment was set to hold on to power. The EUR/USD rallied on the combination of Dutch election results and the Fed announcement. The Federal Reserve late Wednesday raised interest rates, as expected, and Fed Chairwoman Janet Yellen signalled that the central bank will stick to a gradual pace of raising interest rates. Economic data showed that Eurozone inflation rose to 2% on the year in February from 1.8% the month before, in line with both forecasts and the initial estimate. Core inflation was unchanged at 0.9%, also in line with forecasts and the initial estimate. Brent crude lost 0.43% to $51.59 per barrel and West Texas Intermediate was down 0.47% at $48.63. Companies that featured included miners such as Antofagasta, BHP and Glencore which were higher as commodity prices moved up. Fresnillo, Randgold, Hochschild and Acacia were all boosted as gold prices recovered after the FOMC meeting. HeidelbergCement dropped 1.76% after the company lifted its target for cost savings from the purchase of rival Italcementi from €400m to €470m thanks to faster-than-expected job cuts last year. Anglo American rose 8.62% after Indian billionaire Anil Agarwal’s family trust bought a 12% stake in the miner. On regional markets the CAC closed up 27.90 points at 5,013.38, the DAX closed up 73.31 points at 12,083.18 and the IBEX closed up 78.10 points at 10,168.00.

FTSE

The FTSE closed higher on Thursday and at a new record Thursday high with mining shares firmly higher as the Dollar weakened. The Pound moved higher on a hawkish development on interest rates at the Bank of England. The FTSE gave up some of its gains at midday as the Pound jumped above $1.23 for the first time since early March. That move in the Pound came after the Bank of England voted to hold the benchmark rate at 0.25% by 8-1, with board member Kristen Forbes favouring a rate hike. UK inflation looks set to rise above 2% in the “next few months,” the bank said. The policy decision is set to be the last before UK Prime Minister Theresa May triggers Article 50, the bill that paves the way for the start of the Brexit process. The Pound climbed against the Dollar to $1.2365 from $1.2291 late Wednesday in New York. Companies that featured included Anglo American PLC which topped the high risers on the index rising 8.6% after billionaire Anil Agarwal’s family trust, Volcan Investments Ltd., said it would buy a 12% stake in the producer of iron ore, copper and other metals. The purchase makes Volcan the second-biggest investor in Anglo American. Shares of other metals producers pushed higher alongside Anglo American as the sector was helped by a pullback in the Dollar. Randgold Resources PLC rose 3.2%, Fresnillo PLC rose 3.9%, and Antofagasta PLC rose 4.7%. J Sainsbury PLC slipped 1.2% as the company said supermarket sales fell 0.1% in the nine weeks to March 11. The FTSE closed up 47.31 points at 7,415.95.

Economic News Expected Today

 USA

Type Period Forecast Previous Importance
Capacity Utilization Rate Feb 75.5% 75.3% Low
Industrial Production Feb 0.2% m/m -0.3% m/m Medium
Manufacturing Production Feb 0.4% m/m 0.2% m/m Low
CB Leading Index Feb 0.4% m/m 0.6% m/m Low
Michigan Consumer Sentiment March 97.0 95.7 Medium

Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
Trade Balance (Italy) Jan €3.450bln €5.800bln Low
Trade Balance (Eurozone) Jan   €28.1bln Medium

Economic News Expected Today

UK United Kingdom

Type Period Forecast Previous Importance
BoE Quarterly Bulletin March     Medium

Other Global Economic Data Expected

 

Type Period Forecast Previous Importance
Manufacturing Sales (Canada) Jan -0.2% m/m 2.3% m/m Medium

Economic News Round Up MarketsWorld Bars

In the US the number of people who filed for unemployment assistance last week fell less than forecast, the US Department of Labor reported that the number of individuals filing for initial jobless benefits last week fell to a seasonally adjusted 241K, from 243K in the previous week. Initial jobless claims were forecast to fall to 240K last week. US housing starts rose more than forecast last month, the Census Bureau reported that the number of housing starts rose to 1.288M, from 1.251M in the previous month whose figure was revised up from 1.246M. The number of housing starts was forecast to rise to 1.260M last month. The number of building permits issued in the US fell more than forecast last month, the Census Bureau reported that the number of building permits issued fell to 1.213M, from 1.285M in the previous month.The number of building permits issued was forecast to fall to 1.260M last month. Manufacturing activity in the state of Philadelphia rose more than forecast last month, the Federal Reserve Bank of Philadelphia reported that the Philly Fed manufacturing index rose to a seasonally adjusted 32.8, from 43.3 in the previous month. The Philly Fed manufacturing index was forecast to rise 30.0 last month.

Core consumer price inflation in the Eurozone remained unchanged last month, Eurostat reported that Eurozone core CPI remained unchanged at a seasonally adjusted annual rate of 0.9%, from 0.9% in the previous month. Eurozone core CPI was forecast to remain unchanged at 0.9% last month.

The Bank of England kept its benchmark interest rate unchanged at 0.25% and announced no change to its £435 billion asset purchase facility program. Minutes from the central bank’s policy meeting showed that eight members were in favour of leaving the key interest rate at the current record low of 0.25%. Dissenting member Kristin Forbes voted for a 0.25% hike in the benchmark rate to 0.50%. Forecasts were for the central bank to vote 9-0 to keep policy steady.

The Swiss National Bank left its benchmark interest rate unchanged at record-low levels and reiterated that it is still prepared to take further action to weaken the franc. The SNB reported that it was keeping its benchmark interest rate unchanged at -0.75%, in line with expectations. The central bank also left the target range for the three-month Libor unchanged at between -1.25% and -0.25%. The accompanying rate statement released after the announcement said that “the Swiss franc is still significantly overvalued.” The SNB added that it will “remain active in the foreign exchange market, as necessary,” while taking the overall currency situation into consideration.

Australian employment change fell last month, the Australian Bureau of Statistics reported that Australian employment change fell to a seasonally adjusted -6.4K, from 13.5K in the previous month. Australian employment change was forecast to rise 16.0K last month. The Australian unemployment rate rose to a seasonally adjusted 5.9%, from 5.7% in the previous month, the unemployment rate was forecast to remain unchanged at 5.7% last month.

New Zealand’s gross domestic product rose less than forecast in the last quarter, Statistics New Zealand reported that New Zealand’s GDP rose to a seasonally adjusted 0.4%, from 0.8% in the previous quarter whose figure was revised down from 1.1%. New Zealand’s GDP was forecast to rise 0.7% in the last quarter.

The Bank of Japan held policy steady on Thursday in a 7 to 2 vote with the remarks cautious on the price outlook and possible reviews of the 10-year bond yield target if the economy recovers as expected.
The Bank of Japan maintained its short-term interest rate target of minus 0.1% and a pledge to guide the 10-year government bond yield at around zero percent via aggressive asset purchases of ¥80 trillion annually.

Forex Round Up MarketsWorld Bars

The Dollar was slightly lower on Thursday and close to a one-month lows against other major currencies after the release of mostly positive US data as the more dovish tone of the Federal Reserve’s latest policy statement continued to weigh. The Dollar weakened broadly following the decision, as the central bank’s stance was seen as less hawkish than expected by sticking to projections of three total rate hikes in 2017 and not four as some traders had hoped for. Initial jobless claims declined by 2,000 to 241,000 in the week ending March 11 from the previous week’s total of 243,000. Forecasts were for initial claims to fall by 3,000 to 240,000. Housing starts rose 3.0% to 1.288 million units last month from January’s total of 1.251 million units. Forecasts were for an increase of 1.4%. Building permits dropped 6.2% to 1.213 million units in February from 1.285 million the month before. Forecasts were for permits to fall by just 2.6%. The Federal Reserve Bank of Philadelphia reported that its Philly Fed manufacturing index fell to 32.8 this month from 43.3 in February, compared to forecasts for a decline to 30.0.

The EUR/USD was little changed at $1.0731, off a five-week high of 1.0746 hit overnight. The GBP/USD moved up 0.51% to a two-week high of $1.2355 after the Bank of England held interest rates at record lows, but the meeting minutes showed the monetary policy committee was split on the decision. The USD/JPY was down 0.20% at ¥113.16, after hitting a two-week low of ¥112.91 earlier in the session and the USD/CHF was down 0.42% to Fr0.9960. The Australian and New Zealand dollars were both weaker with the AUD/USD down 0.53% at $0.7669 and the NZD/USD was down 0.94% at $0.6980. The USD/CAD was up 0.14% at CAD$1.3325. The US Dollar Index was down 0.11% at 100.25 and a 1 month low.

 
Commodity Round Up MarketsWorld Bars

Gold and silver prices both ended sharply higher Thursday on short covering in the futures markets and bargain hunting in the cash markets following the recent strong selling pressure. A weakening Dollar index also helped. April gold was up $26.50 per ounce at $1,227.00. May silver was up 33.2 cents at $17.255 per ounce.

Crude oil prices finished with a slight loss on Thursday, a day after a big rally, as rising output from the US remained a threat to efforts by other major producers to rebalance the market. Prices however did find some support following data Wednesday showing the largest drop in US crude supply in 10 weeks, as well as weaker Dollar in the wake of the Federal Reserve’s less-hawkish-than-expected rate announcement. Oil prices also briefly traded higher in the last hour before the settlement, helped by comments from Khalid al-Falih, Saudi Arabia’s energy minister, who said output cuts led by OPEC could be extended if necessary. West Texas Intermediate crude oil for April delivery edged down by 11 cents to settle at $48.75 per barrel after rallying by 2.4% on Wednesday. May Brent crude fell 7 cents to settle at $51.74 per barrel.

The MarketsWorld Overview MarketsWorld Bars

Consumer confidence in the US dropped from a 13 year high of 98.5 in January to a three month low in February with a reading of 95.7. The results reflected clear differences between Republicans and Democrats following the election of Donald Trump as president. Republicans registered sentiment about 40 points higher than Democrats, according to the survey. The current conditions index edged down to 111.2 from a reading of 111.3 in the prior month. Future expectations six months from now decreased to a three-month low of 85.7 from 90.3. Consumer confidence is forecast to increase to 97.0 in this reading. Monitor the Dollar for Binary Options trading.

 

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The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects Barry Jenkins’ (MarketsWorld Analyst) current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterized by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable. This message is intended for recipient only and not for further distribution without the consent of MarketsWorld.

 

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