Today is all about monetary policy meetings with the UK, Czech Republic and the Eurozone committees all deciding on levels for interest rates for the next month. As with previous months it is a fairly common view that both the MPC and the ECB will decide to leave their respective rates on hold, resolving to also leave the levels of QE unchanged as well. For the MPC, that will be it for a week or so until the minutes of the meeting are released. I would expect Andrew Sentance to once again prove to be the lone dissenter for leaving rates unchanged although it would be a shock if there was not evidence of protracted discussion amongst the members over the stubbornly high level of inflation and its effect on the UK economic outlook. This is also the first meeting attended by Martin Weale therefore the minutes will also be awaited to discover his thoughts and voting intentions.

The state of affairs is different with regards the ECB meeting as the announcement of the committee’s decision is followed almost immediately by a press conference conducted by the Central Bank’s President, Jean-Claude Trichet. Despite Trichet’s best efforts to make this as mundane as possible, the assembled press and news agency representatives work on a different agenda and the market tends to hang on his every response, looking for clues and intimations of future ECB policy. Finally, the Czech Central Bank will decide at midday whether they are to cut their official rates in response to the recent strong rise in value of the Koruna. Smart money says they will, by 25 basis points.

Over to the US and an unusual string of encouraging numbers yesterday largely supported both the greenback and ensured that US Treasury yields rebounded across the curve. The non-manufacturing ISM index rose more than expected to 54.3 in July and the new orders and employment indexes also increased, which suggests the economy passed through the recent economic slowdown without too much damage being caused. The ADP private payrolls estimate rose by 42,000 in July versus a consensus view of about 35,000 which bodes well for tomorrow’s more important non-farm payrolls number and although investors still appear cautious on the outlook for the US economic recovery, the sentiment has visibly improved. A strong number tomorrow could see a marked change in attitude towards the Dollar.

Outside of the policy meetings we are left with little economic data to watch out for. The German factory orders should show a strong increase and following the ADP report yesterday, the US weekly jobless numbers are hoped to show a drop in claims from last week.

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