Good Morning,
The week really hasn’t started with price action very subdued through yesterday’s session and overnight in Asia. Given the volatility that has characterised the opening weeks of this year, the calm is rather unnerving. Of course, there is event risk aplenty through the end of the week with the UK Budget, the latest Federal Reserve meeting and Thursday’s Bank of England policy decision. For now however, markets are quite happy to not get too committed to an uncertain landscape.
Overnight moves from the central banks of Japan and Australia have contributed to the quiet. The Bank of Japan held monetary policy as is following the unexpected move into negative deposit rates at the end of January. This hold was widely expected but we do believe that there are more aggressive moves coming from the Kuroda team maybe through the summer. Similarly the reaction to the Reserve Bank of Australia’s latest set of minutes was lacklustre and the AUD has remained close to its recent overbought levels.
The data calendar is pretty quiet today as well. With the next hurdle to jump being tomorrow morning’s UK unemployment report.
Have a great day.