Wise money markets eye Central Banks’ interest rates decisions tommorow

A relatively quiet day yesterday for most money markets, with the greenback drifting lower yesterday on concerns that the US economy may not be as strong as it appeared to be after a slowdown in manufacturing figures. Wise money markets eye Central Banks' interest rates decisions tommorowHowever, US factory orders yesterday showed a 0.7% increase as compared to last month, and stopped a sharp drop in GBP/USD, re-assuring markets that they are capable of a recovery.

From the eurozone, speculation is still strong on the reforms to be determined for the most weakened economies as they try and restructure their debt.

Another major point of concern for the markets, is the ECB’s inflation argument for Europe to keep interest rates elevated, on the back of a drop (larger than expected) in producer prices last month.

The ECB has also tightened lending conditions by saying it would cap the levels of government-guaranteed debt that they can post as collateral.

We should see some direction on the euro later today, after it traded sideways at 1.26 against the Dollar, as the ECB meets to try and act to stimulate the troubled economy.

More data is expected from France and Germany on their services PMI.

Most of the limelight in the UK has been taken by Bob Diamond’s resignation and the bank LIBOR rate-fixing scandal now embroiling the Bank Of England.

However, from the currency markets, construction PMI came out weaker than expected, further highlighting underlying weakness in the economy.

The Services PMI is scheduled to follow later today and the much anticipated BOE meeting is booked for tomorrow, where many expect the central bank to increase quantitative easing measures.

A weak number could put the Pound under pressure ahead of the expected announcement of more QE from the Bank Of England tomorrow.

Should be a fairly quiet day today, with the US markets closed.

Most of the focus will be on tomorrow with the ECB meeting, the French and Spanish bond auctions and the BOE meeting.

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