Mark Carney indicates interest rates will increase

We ended last week with more speculation in the news following a BBC Radio interview with the Bank of England Governor Mark Carney where he made comments saying  “If the economy continues on the track that it’s been on, and all indications are that it is, in the relatively near term we can expect that interest rates will increase.” Signifying that interest rates will increase as early as November during the next monetary policy committee meeting held on the 2^nd. The expectation is that the BoE will raise its Bank Rate from 0.25% to 0.50%. His comments come only two weeks after the BoE surprised markets when it announced that most of its policy makers thought the first rate hike in more than a decade would be needed in the coming months.  Causing the pound to make some nice gains against the Euro and Dollar, but have since lost some ground. The comments made on Friday although Sterling positive didn’t move the rates as much as they had two weeks ago, which could be an indication that the expectation of a rate rise has already been priced into the market.

What to expect in the week ahead

As ever a new month brings new data, all of which is capable to change the rates. Over the course of Monday, Tuesday and Wednesday there is a selection of UK PMI data for the manufacturing, construction and services sectors. These currency news releases are one to watch and if we see a slowdown in these sectors it could cause the Pound to give up some of the gains that it made in September.

On Thursday the European Central Bank will release the minutes from their monetary policy meeting in September which could provide some hints on the ECB’s position on implementing its plans to phase out of quantitative easing.

The U.S also has a few big releases out this week. Manufacturing and services PMI data due on Monday and Wednesday. Again one to watch as these historically have the ability to move the rates. But the big mover should come from Nonfarm Payroll and Unemployment Rate both due at 13:30 on Friday followed by 2 speeches from key Fed members to round off the week on Friday.

Monday

09:00     EUR        Markit Manufacturing PMI

9:30        GBP       Markit Manufacturing PMI

10:00     EUR        Unemployment Rate

14:30     CAD       Markit Manufacturing PMI

14:45     USD       Markit Manufacturing PMI

15:00     USD       ISM Manufacturing PMI & ISM Prices Paid

15:30     CAD       Bank of Canada Business Outlook Survey Report

Tuesday

Overnight            AUD       RBA Interest Rate Decision & Statement

09:30     GBP       PMI Construction

11:00     EUR        Producer Price Index

Wednesday

08:00     EUR        Non-Monetary policy ECB Meeting

09:00     EUR        Markit Services PMI & Markit Composite PMI

09:30     GBP       Markit Services PMI

09:30     GBP       Inflation Report Hearings

11:00     EUR        Retail sales

13:15     USD       ADP Employment Change

14:45     USD       Markit Services PMI & Markit Composite PMI

15:00     USD       ISM Non-Manufacturing PMI

15:30     USD       EIA Crude Oil Stocks Change

Thursday

Overnight            AUD       Retail Sales, Trade Balance, Imports & Exports

12:30     EUR        ECB Monetary Policy Meeting Accounts Report

13:30     USD       Trade Balance, Continuing Jobless Claims & Initial Jobless Claims

13:30     CAD       International Merchandise Trade

15:00     USD       Factory Orders

Friday

13:00     GBP       MPC Member Haldane Speech

13:30     USD       Average Hourly Earnings & Weekly Hours

13:30     USD       Nonfarm Payrolls

13:30     USD       Unemployment Rate

13:30     USD       Labour Force Participation Rate

13:30     CAD       Participation Rate, Net Change in Employment & Unemployment Rate

15:00     CAD       Ivey Purchasing Managers Index

As ever, if you are concerned about the rates dropping back and want to make the most out of the recent uplifts then get in touch with your CI currency broker today to talk through the various options we can provide to help you secure your currency and eliminate the risk of a volatile market.