ImperialFXonline : Market Focus Report ahead of BoE & FOMC Minutes

[imperialfxonline]

BOE MINUTES LIKELY TO SHOW UNANMINOUS VOTE

The minutes for the Bank of England's Monetary Policy Committee meeting earlier this month (which was concluded after the U.K. general elections which ultimately resulted in a change of government and a new Prime Minister in David Cameron) should show that all members of the MPC voted to keep interest rates steady at 0.5% and the size of the asset purchasing program unchanged at 200 billion pounds. The latest inflation data has been stronger than expected but the BoE forecasts that the in the long run, the inflation rate is likely to be anchored by a surplus of inventory and there is confidence that the level would fall back into the target range of 2-3%. Markets may focus on the MPC's sentiment in regards to further quantitative easing, after BoE Governor Mervyn King said earlier that more asset purchases cannot be ruled out in view of the near term downside risks to the U.K.'s economic recovery.


FOMC MINUTES MAY HIGHLIGHT STRONGER US GROWTH GOING FORWARD

The FOMC minutes (for the April 27-28 meeting) may show an upward revision to the U.S. GDP forecast for this year, especially with manufacturing data being robust and an improvement in the U.S. labour market towards the end of the first quarter could spur further talk of an exit strategy (namely the need to reduce the balance sheet) but with concerns over the eurozone debt contagion still lingering, the Fed's accommodative monetary policy looks set to stay.


US CPI TO REMAIN BENIGN

U.S. CPI data for April will be also be released on Wednesday but analysts are expecting a slight increase of 0.1% for both the headline and core numbers, compared to 0.1% and a flat figure respectively seen in the previous month. With inflation remaining benign, there should be no reaction in the currency markets to this data, however, traders may take any new language in either the BoE or FOMC minutes as a reason to move the sterling or greenback, albeit only briefly given the recent sharp moves seen as gbp/usd fell to its lowest since March 2009.