The Bank of England, after much anticipation and speculation, has cut rates today for the first time in over seven years to 0.25%. In the meeting this morning, BoE Governor Mark Carney slashed growth forecasts by the most ever and announced a plan to lend 100 billion pounds to banks. BoE also plans to buy corporate and government bonds as part of a package to fight Brexit fallout. The majority of BoE officials expect a further cut in rates before the end of the year; analysts are anticipating rates to bottom out at 0.1% in the coming months. The pound has dropped sharply from the announcements.
Meanwhile, the release of weekly US unemployment claims data came in worse than forecast, with 269K unemployment claims compared to the expected 265K. The US dollar is seeing a waiting game as investors look toward key US jobs data coming tomorrow to assess the Federal Reserve’s intentions on interest rates. A solid Nonfarm Payroll report tomorrow could support upward revision in rate expectations in favor of the dollar.
In the meantime, after its biggest gain in three weeks yesterday, oil is continuing to hold steady, boosting the Canadian dollar after its slip yesterday morning. The Australian dollar is seeing an uptick as investors look to tonight’s Reserve Bank of Australia monetary policy statement.
EURUSD: Euro slipped following BoE policy announcement but bounced off its lows after disappointing US unemployment claims data.
GBPUSD: The pound falls on Bank of England’s interest rate decision and stimulus plan.
AUDUSD: Aussie dollar seeing an uptick in anticipation of RBA monetary policy statement tonight.
USDCAD: Canadian dollar buoyed by steady oil prices.