FX Daily Update
The National Bank of Canada | Aug 04, 2016 08:45AM ET
Bank of England does as expected
Is the glass half empty or half full? It would appear that investors opted for the latter yesterday in shrugging off the major increase in U.S. Crude Oil Inventories and focusing instead on the growth in imports. Coming in at 8.738 million barrels per day, the highest level seen since October 2012, the news was perceived as a sign of stronger global demand. Some observers have posited that this result is simply a byproduct of greater storage capacity. We’ll find out more in the weeks to come. After wavering for a while, crude oil prices ended up rising again, coming close to $41.50 yesterday before levelling off this morning around a dollar lower.
As anticipated, the Bank of England cut its key rate by 25 bps earlier this morning and also upped its quantitative easing program by 60 billion GBP. The key take-home message is that other stimulus measures are waiting in the wings if needed. The outlook hurt the pound sterling, which is down more than 1%.
It is highly likely given this context that the release of U.S. Factory Orders and Durable Goods Orders later this morning will play second fiddle to the news out of England.
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