Normalizing global monetary policy

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Carney’s support of a more hawkish Bank of England policy quickly translated to the local sovereign bond market. The 2-year Britain Government Bond traded at levels reflecting around 0.82%-0.83% yield during the start of Friday’s session, versus 0.72% at the end of the previous day. The idea of less Sterling infused into the markets has also strengthened it against the dollar by an approximate 0.6%, to a level of 1.694. When this will translate to an actual policy change is a broad question. The Bank of England’s Official Bank Rate has been fixed at 0.5% for more than five years. All analysts currently surveyed on Bloomberg expect the BoE to keep rates unchanged at its upcoming rate announcement, on June 10th. On the other hand, the aforementioned rise in BoE rates means that investors see that taking place sooner or later. Economic conditions in the U.K. are generally more upbeat than those of other developed economies. For instance, the local Consumer Price Index was last published to indicate a 1.7% year over year increase of prices, after being just shy of 2% in recent months. The same cannot be said regarding many countries in the rest of the Eurozone, with a Eurozone aggregate print indicating a 0.5% annual increase of prices. The bottom line is that the path to normalizing global monetary policy goes through at least one central banker declaring economic settings as reasonable. Mark Carney may just be that central banker. Join Anyoption and take advantage of the volatility of the markets ..Start Trading TODAY!

Economic events of this week

Monday: The Rightmove National Asking Price indicator will be published in the U.K, after surging by 2.6% last month. March’s Machine Orders data will be published in Japan, after those presented a 10.8% annual growth, in the latest figure. Tuesday: The All Industry Activity Index is due in Japan. Analysts expect last month’s 1.1% decrease reverting to a 1.6% increase. April’s Consumer Price Index is due to be released in the U.K. Analysts expect it to continue indicating a below, but close to 2% annual inflation. The Producer Price Index will also be released in the U.K., but analysts see that presenting milder figures. Wednesday: The day will see the BoJ issue a monetary policy statement, followed by Governor Kuroda holding a press conference. Retail Sales data will be released in the U.K. This will be followed by the Eurozone’s Consumer Confidence Index. In the U.S., the Fed will release minutes from April’s meeting. Thursday: The Markit Manufacturing Purchasing Managers’ Index will be published in Japan. China will see the GSBC Manufacturing Purchasing Managers’ Index published. The day will also see PMIs published throughout the Eurozone, namely France, Germany and the Eurozone Aggregate. The U.K will see a preliminary estimation of the first quarter’s GDP being published. In the U.S., the weekly Initial Jobless Claims will be published, after dropping below the critical level of 300K (see above). Further in the U.S., May’s Markit Purchasing Managers’ Index will be published, analysts expect it to increase even higher, from a previous print of 55.4. Also due are Existing Home Sales and the Leading Index. Friday: The day will kick off with the publishing of Germany’s final estimation of the first quarters’ GDP. This will be followed with the IFO Business Survey. In the U.S., April’s New Home Sales figure will be published. Start Trading HERE!