The BOE will be the main event in European trading today
Good day, everyone! Hope you're all doing well as we look to get things going in the session ahead. Markets are treading with caution as bonds continue to stay bid since overnight trading amid concerns surrounding the coronavirus outbreak situation this week.
The softer risk flows are continuing to put pressure on Asian equities and Facebook's slower growth and profits from the earnings report yesterday is failing to provide investors with much cheer on the day so far.
There is still a lot of uncertainty surrounding the potential implications of the coronavirus on regional and global economies - and that is going to still weigh on markets for some time to come, more so if the WHO declares the virus as a public health emergency.
Looking ahead today, risk remains the key focus as markets grapple with the situation but the BOE will be in the spotlight as well ahead of what is a coin flip of a decision later.
0800 GMT - Switzerland January KOF leading indicator index
Prior release can be found here. The data here measures the future trends of overall economic activity in the Swiss economy. A minor data point.
0855 GMT - Germany January unemployment rate, claims
Prior report can be found here. Although the unemployment rate continues to hold at the lows, there has been some growing uneasiness as claims as starting to show a more mixed picture about joblessness amid the economic slowdown. If the trend keeps up and the unemployment rate eventually ticks higher, it may present some worries about the German economy this year.
1000 GMT - Eurozone January final consumer confidence
1000 GMT - Eurozone January economic, industrial, business, services confidence
Prior release can be found here. A general read of economic sentiment towards the euro area economy. A minor set of data points.
1000 GMT - Eurozone December unemployment rate
Prior release can be found here. Expectation is for the unemployment rate to keep steady at 7.5%, reflecting tight and steady labour market conditions in the region. Low-tier data.
1200 GMT - BOE announces its January monetary policy decision
The December decision can be found here. The decision is very much a coin flip - OIS market pricing in 45% odds of a rate cut - and that presents a bit of near-term risks on either side of the equation for the pound. If the BOE does not cut but hints at one to come, the pound may not necessarily rally much but it also shouldn't fall significantly as a full 25 bps rate cut is pretty much priced in by May already. Meanwhile, if the BOE does cut and hints at more to come, that is likely to precipitate further weakness in the currency down the road. I'll put up a more comprehensive preview later but in any case, expect the decision today to be one that will have a decent impact on the pound regardless.
1300 GMT - Germany January preliminary CPI figures
Prior release can be found here. Expectation is for headline inflation to tick a little higher once again and that should give more comfort to policymakers to start the year. But before the release here, we will get state readings and that will set the tone for what to expect in the national reading later in the day. As always, focus is on the Saxony report as that will be accompanied by the core reading for a better gauge of price pressures.
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading!