Daily Update - 12th September 2017
On Monday, there are no major events or indicators on the economic calendar except from Canada Housing Starts released by the Canadian Mortgage and Housing Corporation. The trend in housing starts was 219,447 units in August 2017, compared to 217,339 units in July 2017, Canada Mortgage and Housing Corporation (CMHC) announced on Monday. The big jump in the open positions in the ITM Put options indicates the investors are expecting the CAD to drop in the short-term. Sterling jumps broadly today on talk that BoE would step up its warning on interest rate later in the week. The central bank is widely expected to keep bank rate and asset purchase target unchanged. Based on current inflation outlook, there is also no imminent need for a hike. But BoE may reiterate that markets are under-estimating the scale of interest rate hikes in the coming years. And it may want households, business and investors to be well prepared. However, it should be noted that policy makers will have to look into inflation data to be released later today. In particular, CPI is expected to climb back to 2.8% yoy in August. Any downside surprise there would intensify expectation that inflation won't hit 3% handle as BoE projected. And that would knock Sterling back down. Of course, focus will also be on whether hawks Michael Saunders and Ian McCafferty would change their mind on voting for rate hike too.Yesterday’s Focus
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