Calendar Clarity on Carney

Carney gave clues on exactly when the BOE might begin hiking rates on Thursday. The US dollar remained firm but the Australian dollar was the top performer while the kiwi lagged on the day. The Asia-Pacific schedule to end the week is light.

After Carney hinted at sooner rate hikes earlier this week, the obvious question was, when? The market had been dabbling with the idea of a May hike but then priced in an increase by March. Today, Carney indicated that the BOE is on hold for at least a few months.

Some (like the FT) interpreted his comments to mean a hike could come in December or January but a closer look points to later. “In my view, the decision as to when to start such a process of adjustment will likely come into sharper relief around the turn of this year,” he said. That means – barring a shock – the BOE won't even seriously begin to debate about hiking until year end. In that sense, the market may have gotten ahead of itself by fully pricing in a March hike. That said, the pound continues to benefit from EUR/GBP flows. That pair fell for the sixth consecutive day on Thursday and touched a six-year low. The pair has fallen in 13 of the past 16 weeks.

The other continuing story is commodity FX weakness. AUD scored a minor bounce but the NZD and CAD were laggards once again despite sizeable declines Wednesday. That's good evidence that few buyers are waiting in the weeds.

Looking ahead, the Asia-Pacific calendar winds down with only the lowly Australian leading indicators  report. Instead, look to commodities and Chinese stocks to drive sentiment.