Carney's swansong - The BoE joined the........>

FOREX: Carney's swansong

- The BoE joined the ranks of central banks slashing interest rates to combat

the expected downside economic effects of the Coronavirus outbreak. As one of

Mark Carney's final acts as BoE governor, the MPC cut interest rates by 50bps to

0.25%, with the incoming governor Bailey adding that the Bank have more policy

space if required. The kneejerk response in GBP was lower, but this has been

fully recouped ahead of the NY crossover, prompting a decent reversal print in

EUR/GBP.

- Wall Street's solid bounce into the close late yesterday provided a decent

excuse to bid European equities higher from the open, resulting in gains of

between 1.5-3% across core indices. The modestly improved risk outlook has

proved positive for high beta and growth-proxy currencies, leading NZD higher

and keeping the USD under a bit of pressure. Short-end implied vols are on the

front foot, with USD/JPY 1m adding just over a point at typing.

- US inflation data is next up, with CPI seen slowing slightly in the February

print. There are no central bank speeches of note for the rest of the day.