Braced for Super Thursday!

It’s Super Thursday! This will be the last Super Thursday before the referendum. At midday, the Quarterly Inflation Report will accompany the monthly BoE rate decision. Carney’s news conference will kick off half an hour later at 12:30.

It’s probably the inflation forecasts that will hold the key to any real reaction, but any change away from the expected 9-0 vote is also an important consideration. The market is keen to see what, if any, Brexit impact will be built into comments, but largely the expectations are for the tone to be seeking calm and stability. Of course, the slowdown in the recent PMI data sets can’t be ignored, but how much of this is will be attributed to Brexit risk and how much change do they expect to see post June 23rd? For balance against the negativity, we must not forget the stronger than expected CPI reading last month, which will also be reflected in the report. Yesterday, JP Morgan released a call that suggested the EU referendum has hit UK GDP by between at least 0.5% so far. That’s about £2.2bn in real money.

Osborne set his stall out with the Treasury Select Committee, adding his opinions to the ‘In’ camp. Sterling tested higher against the USD yesterday afternoon, but met selling pressure ahead of 1.45 and the move ran out of steam around 1.4480

This morning we’ve had RICS Housing Price Balance out, which dropped to 41%. This is a reflection of the housing market strength and a leading indicator of house price inflation, but drove no reaction ahead of the BoE data later today.

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We saw EUR react positively to ECB’s Weidmann commenting that the ECB must not keep the current, ultra-loose policy in place for too long. This morning French CPI data was in-line with expectations at 0.1%, but with all focus on the BoE, there was little reaction.

Oil moved higher on the news that the weekly stock level reading was lower, but this only seemed to help the CAD a little.

Risk aversion from down under, after the RBA rate cut and softer Australian inflation expectations, saw safe-haven flows into the JPY. This was only short lived as the market remembered that BoJ is open to FX intervention if they feel the JPY gets too strong.