Today, the focus of traders’ attention is on the Bank of England’s monetary policy meeting.

Currently, markets are pricing a 19% chance of a 25 bps rate hike at the next FOMC meeting on December 12-13 and a 27% chance of a 25 bps rate hike at the January 30-31, 2024 FOMC meeting.

The latest economic data showed that the change in US employment numbers for October from ADP was positive 113,000, which was weaker than expectations of 150,000. The US Manufacturing Activity Index for October unexpectedly declined by 2.3 to 46.7, which was weaker than expected. JOLTS job openings in the US for September unexpectedly rose by 53,000 to a 4-month high of 9.553 million, stronger than expectations of a decline to 9.400 million.

The Bank of England will hold a monetary policy meeting today. Investors expect the Bank of England to keep rates at a 15-year high of 5.25%, with policymakers predicted to reiterate that rates should remain at current levels for an extended period of time despite growing signs of weakness in the economy. But it should not be forgotten that while inflation in the UK has fallen, it remains the highest among major economies and is difficult to contain. So, any hawkish remarks from the Governor of the Bank of England may give temporary support to the British currency.

Silver prices came under pressure yesterday amid weaker-than-expected news from China and the US on weaker demand for industrial metals following unexpected declines in China’s Caixin manufacturing PMI and US ISM manufacturing PMI for October.

Oil prices retreated from their best levels after the dollar index rose to a 4-week-high yesterday and on signs of weakness in manufacturing activity in China and the US. Crude oil inventories rose by 773,000 barrels, according to the EIA, less than expectations of 1.8 million barrels. Also, keep in mind that geopolitical risks are supporting oil prices due to fears that an escalation of the conflict between Israel and Hamas could jeopardize oil supplies from the Middle East.

Asian markets were predominantly rising yesterday. Japan’s Nikkei 225 (JP225) gained 2.41% yesterday, China’s FTSE China A50 (CHA50) added 0.84%, Hong Kong’s Hang Seng (HK50) ended the day down by 0.06%, and Australia’s ASX 200 (AU200) ended Wednesday positive 0.85%.

Japan’s Nikkei 225 Index added 1.2% on Thursday, extending gains for the third consecutive session after the Bank of Japan took a less hawkish stance earlier in the week than many expected. A rise in technology stocks helped Australia’s ASX 200 index (AU200) climb 1.3% despite the country’s September trade surplus data falling to a 2.5-year low.

New Zealand’s unemployment rate has been on the rise. Unemployment rose to 3.9% from 3.6% in the last quarter. The employment report showed growing spare capacity in the labor market as higher interest rates cool the economy. Aggressive rate tightening by the Reserve Bank of New Zealand (RBNZ) has led to lower inflation, which fell to 5.6% in the third quarter. Inflation expectations are also falling, an encouraging sign that the RBNZ will seek to avoid a rate hike at its November meeting.