UK employment in focus ahead of BoC and Yellen – Danske Bank

Analysts at Danske Bank suggest that UK employment data will be the key economic release for today ahead of the all-important Yellen’s testimony and BoC rate decision.

Key Quotes

“In the UK, the unemployment and earnings figures for May are due for release. Despite the pickup in inflation in the UK, wage growth remains subdued and the underlying price pressure does not signal that the BoE needs to tighten its monetary policy in the near term.”

“Focus will be on Fed Chair Janet Yellen's semi-annual testimony to congress, which is due to be released at 14:30 CET. Market participants will scrutinise the speech for any hints about balance sheet reduction ('quantitative tightening') as well as the timing of the expected third rate hike this year.”

“The Bank of Canada (BoC) is expected to hike its policy rate by 25bp to 75bp. The latest hawkish communication from BoC members has implied this is almost fully priced in but given the significant focus on the global tightening of monetary policy, the expected hike could fuel these speculations further. Notably, market pricing has gone from a 25% probability of a rate cut only two months ago to the hike being almost fully priced in now without considerable changes in economic data.”