BoE set for hike, Fed to get new head, trillion-dollar
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[November 02, 2017]
By Marc Jones
LONDON (Reuters) - Traders were bracing on
Thursday for landmark events including the Bank of England's first rate
hike since 2007 and the unveiling of a new Fed chief as well as results
from Apple as it looks to become the world's first $1 trillion company.
The British central bank is widely expected to announce a 25 basis point
rise in interest rates from record lows at 1200 GMT, even though
economic growth appears weaker than before any increase in borrowing
costs in the past 20 years.
With a hike largely priced in, sterling <GBP=> was barely changed
against a marginally weaker dollar <.DXY>.
European government bond yields inched up while stocks in the region
edged back <.FTEU3> after hitting two-year highs on Wednesday. [.EU]
"The interesting thing about the BoE is the vote and the size of the
majority, and secondly the context around that which we will get from
the inflation report," said JPMorgan Asset Management's International
CIO of fixed income Nick Gartside.
"What those two things will point to is whether it is a one-off move or
is indeed the start of a mini-hiking cycle. Our sense at the moment is
that it is the start of a mini-hiking cycle."
The dollar meanwhile gave up some of the gains that have lifted it to a
3-1/2 month high this week. [/FRX]
The Federal Reserve bolstered bets on a third U.S. rate hike of the year
on Wednesday, but the focus is now on delayed tax cut plans due later
and Donald Trump's expected nomination of Jerome Powell to replace Janet
Yellen to lead the central bank.
Powell is a current policymaker and is seen by Fed followers as a Yellen-style
pragmatist and less likely to jack up interest rates than some of the
other candidates rumored to have been in the running.
The dollar index, which tracks the greenback against a basket of six
major rivals, slipped 0.2 percent to 94.533 as it pulled back 0.3
percent against the yen to 113.89 and $1.1655per euro.
Rising interest rates were also in focus in central Europe where the
world's best performing mainstream currency -- the Czech crown -- was
awaiting what is expected to be the second hike there in four months.
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Workers stand on steps opposite the Bank of England in the City of
London, Britain November 1, 2017. REUTERS/Toby Melville
Having had a currency peg removed earlier in the year, the crown is up
more than 16 percent against the dollar in 2017 and at a four-year high
against the euro.
Results due later from tech titan Apple were also in focus for stocks
traders who have seen MSCI's 47-country 'All World' index notch its
latest batch of record highs this week.
Apple Chief Executive Tim Cook quashed concerns recently about muted
demand for the iPhone X, which is due for release on Friday, saying
pre-orders for the 10th anniversary smartphone were "off the charts",
but analysts will watching closely.
Expectations that many users are on the verge of upgrading from older
iPhones have also sent Apple's stock to record highs, pushing it closer
to becoming the first publicly listed company with a stock market value
above $1 trillion.
"Apple is taking the iPhone franchise to a whole new level with the
iPhone X, pushing the company deep into the ultra-luxury smartphone
market," Drexel Hamilton analyst Brian White wrote in a note to clients.
Commodities appear to be back in boom mode although crude oil futures
which have roared higher over the last month dipped for a second day,
with Brent crude <LCOc1> down 10 cents at $60.56 per barrel and U.S.
crude <CLc1> down 1 cent at $54.29.
Metals traders were also locking in profits, having seen the likes of
copper and nickel surge to a two-year high and aluminum to a more than
five-year high this week. [MET/L]
(Reporting by Marc Jones; Editing by Catherine Evans)
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