The Bullet Report: Super Thursday for the GBP. BoE to cut rates today

Today’s main even is the BoE Rate decision where the Central Bank is expected to cut rates by 0.25% and expand its quantitative easing program. The expected cut later today will be the first since 2009 however volatility will depend solely on the QE expansion. IF they don’t expand the asset purchase plan, then a spike to 1.34+ cannot be excluded. In the US, jobless data as well as durable goods are due to be released.

Currencies: The GBPUSD (1.3310) rose yesterday as investors count on the BoE to cut rates. Volatility is expected to be subdued up to the time of the rate announcement. The EURUSD dropped to 1.1149 from 1.12 levels yesterday on the back of good ADP employment data in the US, which was also the reason for the general good day for the USD. The USD Index, rose 0.6% from Monday’s 5 – week low as investors also prepare for tomorrow’s all important on Farm Payrolls report. Against the JPY, the USD was 0.2% lower at 101.05, not far from Monday’s low of 100.68.

Stocks: Shares in Asia were broadly higher Thursday on an overnight rebound in oil prices, though Japan’s Nikkei reversed early gains amid uncertainties over monetary easing. The Dow industrials snapped its 7 session losing streak yesterday on the back of a rebound in crude-oil futures. However, major indexes traded within a narrow range in what strategists described as a typical August market.

Oil and Gold: As mentioned, Oil rallied by 4% to $41.08 a barrel following a 1.4% drop on Tuesday. Still, oil prices are still hovering around bear-market territory since early June. OPEC oil producers are pumping near record high levels while top crude exporter Saudi Arabia cut prices for its Asian customers at the weekend, signaling another price war for crude market share. Gold ($1352) and other metals futures retreated Wednesday following a stronger-than-expected round of economic data and a stronger dollar.

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