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Bank of England and ECB Announcements

Overnight Asian equity markets rose after the Japanese economy shrank less than the government estimate, which saw the regional benchmark index rising after a three consecutive negative sessions. The Yen weakened against all the majors after Japan announced a record current-account deficit.

A committee of UK MPs and peers have warned that ministers should detail plans for the scenario of a Euro-zone break-up “as a matter of urgency”. The National Security Strategy believe that a partial or complete collapse of the Euro-zone is “plausible” . The fallout of the collapse would have devastating effects on the UK through political and economic instability in the region, and preparation’s need to be made in-case this scenario becomes a reality. –BBC.com

Traders are awaiting the policy meetings of the ECB and BoE this morning, with both central banks expected to hold policy as the status quo. Interest rates for both the UK are expected to be held at historic lows, for a long time to come, though some analysts believe that this cheap financing could fuel another asset bubble. The ECB could indicate a future interest rate cut if the EU economic situation deteriorates or if Greek does eventually default. The BoE is likely to step back and see how effective their recent increase of £50bn of quantitative easing (QE) is, before increasing their asset purchase plan. It will be the press conferences after the announcements which will be closely watched to see if there is an indication of a change in rhetoric or a hint of future policy. There could be considerable volatility as traders react to the comments made.

-BMW make a pre-tax profit of €7.4bn

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