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Pound Jumps as BoE Holds Rates

Published July 14, 2016
  • The British Pound is trading higher across the board this morning after the Bank of England left rates unchanged – a 0.25% cut in rates was widely expected 
  • Governor Carney noted that further stimulus is needed to support the UK economy which is at serious risk of stumbling into a prolonged period of contraction following the decision to leave the EU
  • BoE officials said they are prepared to deliver stimulus on multiple fronts next month and this could mean a rate cut coupled with quantitative easing measures
  • GBP jumped 1.7% against the USD following the news and 1.4% against the Loonie but is still trading at multi-decade lows
  • USDCAD is trading at its lowest levels in 5 days but is still well within its recent range as sideways consolidation continues
  • Oil prices popped 1.83% to recover some of yesterday's losses but are still 14% below June's highs as oversupply concerns continue to weigh on the market
  • The EIA reported on Wednesday that inventories of crude fell by 2.5M barrels last week but that inventories for gasoline and distillates unexpectedly surged  –  with gasoline stockpiles rising by 1.2M barrels even as the summer driving season is in full swing
  • Inventories for gasoline are now at their highest in over a quarter century…..a fact that is not likely to prove bullish for oil prices anytime soon
  • The US reported that jobless claims came in at 254K for last week, better than the 265K expected
  • As well, the Producer Price Index (PPI) rose in June to 0.5% from 0.4% in May, beating expectations for a drop to 0.3%
  • USDCAD hasn't reacted to the data and continues to trade in the mid 1.2900's
  • Canada reports Manufacturing Sales Friday while the US delivers Retail Sales and CPI data so we could see some fireworks to close out the week in USDCAD

Chart: USDCAD sideways consolidation continues. Can the USD break out of a bullish ascending triangle formation?