Focus is clearly the Bank of England the European Central Bank meetings. The BOE is probably the more interesting given it is the first meeting under Canadian Mark Carney. It can be expected to be uneventful with QE to remain and the benchmark rate to remain unchanged. But look for forward guidance from Carney in a bid to create more certainty on the end of the UK central bank’s stimulus measures. It’s too early to say how much influence Carney will have in the initial days of his stewardship and he is only one vote of nine but he is widely respected and well known in the central bank club. Anything he says will be noted.
A little later comes the ECB meeting and though no changes are expected there, anything ECB President Mario Draghi has to say will be closely monitored. A sideshow for the ECB for now is the political uncertainty in Portugal as the government loses support from voters on the back of unpopular austerity policies. The ECB will be monitoring developments there but the health of the euro zone as a whole will remain central and unless Portugal, still a tiny component of the European Union and euro zone, looks like it is going to cause problems elsewhere, it will not impact today’s meeting. In fact, despite Portugal, data seems to indicate the euro zone economy looks likely to rise from recession in the second half of this year. The data at least puts rest to market talk earlier this week about any extreme measures the ECB may make.
With U.S. markets closed for the July 4, Independence Day holiday expect some volatility in thin liquidity but overall trends to remain intact.