GBP/USD hit after BOE backs out of rate hike

"Success is not final, failure is not fatal: it is the courage to continue that counts." — Winston Churchill

 

 

HEADLINES

 

 

• Bank of England defies markets, keeps rates on hold
• Dollar rebounds, sterling slumps, as market resets rate expectations
• Oil Drops Below $80 in Wild Reversal After OPEC Keeps Production Steady
• Gold futures settle higher as U.S. Treasury yields fall a day after the Fed's policy decision
• Big Tech, chipmakers power S&P 500, Nasdaq to record highs
• US Nonfarm Payroll October Preview: Inflation to the rescue?

 

 

FOREX

 

 

Bank of England defies markets, keeps rates on hold

 

The Bank of England kept interest rates on hold on Thursday, dashing investors' expectations for a hike that would have made it the first of the world's big central banks to raise rates after the COVID-19 pandemic. Seven of its nine policymakers voted to hold off a rate rise for now so they could see the how many people became unemployed following the recent end of the government's job-protecting furlough scheme.

 

Dollar rebounds, sterling slumps, as market resets rate expectations

 

The dollar rose on Thursday as investors reset monetary policy expectations after the Federal Reserve repeated it saw high inflation as transitory, and the Bank of England caught the market off-guard by keeping rates steady, sending sterling skidding.

The lack of a BoE rate cut sent sterling , which had initially led the gains on the dollar after the Fed, tumbling. It was last down 1.33% at $1.3502, its lowest level versus the greenback since Oct. 1

 

 

COMMODITIES

 

 

Oil Drops Below $80 in Wild Reversal After OPEC Keeps Production Steady

 

Oil prices settled lower Thursday after giving up gains on profit taking following the decision by OPEC and its allies to stick their plan to gradually boost production, defying calls from President Joe Biden to ramp-up production. OPEC and its allies including Russia decided to stick with their previous plan to raise oil production by 400,000 barrels a day next month.

 

Gold futures settle higher as U.S. Treasury yields fall a day after the Fed's policy decision

 

Gold futures ended sharply higher on Thursday, supported by a fall in U.S. Treasury yields in the wake of Wednesday’s decision by the Federal Reserve to taper bond purchases by $15 billion a month. December gold rose $29.60, or 1.7%, to settle at $1,793.50 an ounce after posting a loss of 1.4% on Wednesday.

 

 

STOCKS

 

 

Big Tech, chipmakers power S&P 500, Nasdaq to record highs

 

The S&P 500 and the Nasdaq hit record highs on Thursday on stellar earnings reports, with investors looking past the Federal Reserve's asset tapering plan as borrowing costs remain low. Shares of Qualcomm Inc (QCOM) jumped 11.4% after the chipmaker forecast better-than-expected profit and revenue for its current quarter. Rival Nvidia Corp (NVDA) also climbed 9.9% to provide the biggest boost to the S&P 500 and Nasdaq, while the Philadelphia SE semiconductor index (.SOX) added 2.1%.

 

 

ANALYSIS

 

 

US Nonfarm Payroll October Preview: Inflation to the rescue?

 

From a market perspective, strong payrolls are a guarantor for the Fed’s taper program which over time will lead to higher US interest rates and, until other central banks catch up, a higher dollar.

In an odd way the rampant consumer inflation that was the barely stated motive behind the Fed’s bond taper may provide the incentive for many workers to return to their jobs. 

When gasoline is almost 50% higher in a year and food costs are rising monthly, a steady job is likely to be seen as far more dependable than government largesse.

 

 

CHART

 

 

Euro / British pound - Daily Candlesticks

Source: GKFX Prime Metatrader 4

EUR/GBP is rising back towards the top of a long term down-sloping channel. A breakout from the channel could imply a major new uptrend - Prepared by Trading Writers*

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

 

SOURCE

 

 

https://www.fxstreet.com/economic-calendar
https://www.reuters.com/business/sp-nasdaq-futures-scale-new-heights-earnings-boost-2021-11-04/
https://www.reuters.com/world/uk/bank-england-defies-markets-keeps-rates-hold-2021-11-04/
https://www.fxstreet.com/analysis/us-nonfarm-payroll-october-preview-inflation-to-the-rescue-202111041503
https://www.investing.com/news/commodities-news/oil-drops-below-80-in-wild-reversal-after-opec-keeps-production-steady-2668582