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Markets subdued prior to BoE and ECB rate announcements

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In the US it is a national holiday today, Independence day. This will affect the trading hours of certain markets with us remaining closed for the session, please see your client emails for further details

The markets seem relatively subdued this morning ahead of BoE and ECB announcements, with the US closed for Independence Day volumes are likely to be lower.

Bank of England

Mark Carney began his term as the first foreign national to become the Governor at the Bank of England on Monday. Today is the first of many rate announcements that he will oversee, with many market commentators expecting a non-event as far as the announcements. Interest rates are expected to be left unchanged at the record low of 0.50%, with asset purchases (QE) to be held steady at £375bn. However if the expected happens (both left unchanged) it should leave traders slightly disappointed with Carney’s first week in office being an anti-climax.

European Central Bank

The European Central Bank releases their policy decision at 12:45pm with the press conference following at 13:30pm. The majority of analysts expect rates to be left unchanged at 0.50%, the ECB releases an accompanying pre-prepared text with the every announcement, even if policy has been left unchanged. This could signal future policy changes or an alteration in tone from previous months.

Both announcements are likely to have considerable volatility surrounding the data point, prepared text and press conference. If either central bank does change policy this would lead to a significant market move, as it would be unexpected and not currently priced in.

Egypt

The Egyptian army has taken control form the democratically elected President Morsi. The country has deep rooted economic, social and political issues which have flared again with violence following the one year anniversary of Morsi being sworn in as the countries President. The uncertainty and potential of contagion into an already fractured region has lifted Oil prices to a 14-month high, due to the likelihood of disruption of supply.

All times quoted are BST (London, England)