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● Stock markets mixed after S&P 500 stalls below 2,400
● Sterling hovering around $1.2940 before Bank of England’s “Super Thursday”.
● Dollar index steady while Treasury yields nudge lower; Kiwi dollar hit
● Brent crude extends rally above $50 a barrel; Commodities still under fire in China

Can the Bank of England’s “Super Thursday” help push the pound back above $1.30 for the first time since September?

The UK’s monetary guardian at 12:00 BST will reveal its latest policy decision, and publish the minutes of its meeting and the quarterly inflation report.

No change in official borrowing costs is expected, but traders will be keen to note the accompanying commentary and whether there is any sign of a shift in thinking among the rate-setting committee.

“Risks are titled to the hawkish side, given consistently strong data,” said forex analysts at Citi, noting that it “will be big news” if Michael Saunders joins Kristin Forbes in dissenting over standing pat.

“Having said that, with a General Election just a few weeks away and Brexit noise ongoing, some believe that they may resist the temptation to be hawkish and play it safe,” Citi added. For now, sterling is flatlining around $1.2940.

What to watch
Another milestone — S&P 500 2,400 — beckons for the US stock market as its eight-year bull run rumbles on. The S&P 500 closed on Wednesday at 2,399.63, having gained 7.2 per cent so far in 2017 amid optimism over corporate earnings.

But investors appear sanguine about the market’s prospects. The CBOE Vix index, an implied volatility measure known as Wall Street’s fear gauge, is just 10.21, way below its historic average of about 20.

Forex and fixed income
Another central bank has already made its presence felt in the currency markets on Thursday.

The New Zealand dollar is down 1.4 per cent to US$0.6844 after the Reserve Bank of New Zealand held its key interest rate at a record low of 1.75 per cent and signalled it did not expect to raise rates until late 2019. The drop takes the kiwi to its weakest level in 11 months.

The euro is up 0.1 per cent to $1.0874 and the 10-year German Bund yield is climbing 3bp to 0.44 per cent as investors continue to absorb comments made by ECB president Mario Draghi in a testy meeting on Wednesday with Dutch lawmakers.

South Korea’s won is rising 0.3 per cent to Won1,127.41 per dollar following Wednesday’s inauguration of President Moon Jae-in.

Commodities
Oil prices are adding to gains from a late-day rally on Wednesday that pushed Brent crude, the international benchmark, back above the $50-a-barrel mark.

Brent, which jumped 3.1 per cent in the previous session following news of a big drop in US oil inventories, is up another 0.9 per cent $50.66 a barrel. West Texas Intermediate, the main US contract, is adding 1 per cent to $47.79 a barrel.

China’s commodity prices remain under pressure, with iron ore futures dropping to a seven-month low as traders stress about dwindling liquidity in the sector.

(This article has been amended to correct the level of sterling.)

Copyright The Financial Times Limited 2017. All rights reserved.
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