Europe Market Update

The key interest rate decisions from the ECB and Bank of England will obviously be the main focus today, but core-European data starts at 0700GMT for Thursday with German trade balance andcurrent account data for December.
We should get the UK HBoS house priceindex at 0800GMT this morning, as it is the last date in its scheduled range. The forecast is for a rise of 0.4% m/m, 9.6% y/y.

Neither the Bank of England or ECB are expected to move rates today, although traders will obviously be wary of the Bank of England decision at 1200GMT following the surprise interest rate hike last month.
As the Bank of England State of Play says, "The Bank ofEngland's Monetary Policy Committee is unlikely to drum up a majority for a rate hike in February, but the chance of another rate hike near term remains high."
Four members of the nine-strong MPC voted against the shock January hike so they should be counted on to oppose a further hike this week, which means the doves only need one more vote to keep rates on hold. The Inflation Report forecasts will be another key to the Feb rate decision and the MPC will have all the key details of the report from the start of this meeting.

The ECB decision is due at 1245GMT and is also expected to be unchanged, although the usual heavy focus will be on the press conference from 1330GMT.
ECB President Jean-Claude Trichet is currently seen re-deploying the 'vigilance' word in order to prepare the market for the expected 25bps rate hike in March.
However, if Trichet instead repeats that the ECB will be 'monitoring developments very closely', then this will likely shift expectations of a rate hike further out to April.