BoE Minutes May Show More Dovishness

Bank of England minutes could show more dovish MPC, more delays on Greece as troika teleconference finishes with no agreement, Japanese trade numbers swing to deficit, BoJ make no comment regarding intervention after the sharp bounce in USDJPY, FOMC decision due at at 14:15 ET (18:15 GMT)

Today's focus in the UK will be on the Bank of England minutes (4:30 ET, 8:30 GMT) of the last MPC meeting earlier this month, and the discussions had by the members of the committee will be particularly relevance given yesterdays downgrade of UK growth forecasts by the IMF. Of particular interest will be whether any members join Adam Posen in calling for further measures to stimulate economic growth. If more than two members join Posen in pressing for more QE the likelihood of a rate cut in October will increase significantly.

On the Greece debt drama, the IMF said Athens is facing a EUR 4.6 bln shortfall in its 2012 deficit target, while Greece fin min says he is confident the IMF will disburse the remaining EUR 8 bln tranche.

Last nights teleconference between the troika and the Greek government once again broke up with no agreement, which doesnt inspire too much in the way of confidence that an agreement is imminent. The EU issued a statement that stated that good progress was being made and that the troika would return to Athens next week after the IMFs semia-annual meeting where there is likely to be further discussions. As an exercise in political brinksmanship it is hard to match and it is likely that the discussions could well continue right up to the point when Greece actually needs the money in October. If that is in fact the case it doesnt inspire much in the way of optimism.

Japanese trade numbers for August continue to highlight the impact the strong yen is having on Japanese exports after the numbers came in much worse than expected, due to a sharp drop in export growth. The trade deficit totalled 775.3bn yen, way worse than expected, compared to July's 72.5bn surplus. The biggest drop in exports came as exports to Taiwan and the Philippines, dropped sharply.

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Later on this evening the Fed is set to conclude its two day meeting in the wake of a highly controversial intervention by Republican leaders, who in a letter to Bernanke urged him to refrain from further measures to stimulate the economy. This intervention is slightly controversial because the Federal Reserve is an independent body and should be seen to be outside of political influence.

In any case Bernanke's options appear somewhat limited and markets arent likely to move too much ahead of the announcement.