Talking Points:
British Pound May Rise as BOE April Meeting Minutes Reboot Rate Hike Bets
Aussie Dollar Gains as Core CPI Unexpectedly Rises, Firming RBA Outlook
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The release of minutes from April’s Bank of England policy meeting headlines the economic calendar in European hours. Leading survey data shows the UK began to re-accelerate in 2015 after a protracted slowdown starting in October 2013. The rebound followed a pickup in the Eurozone, which accounts for close to half of UK export demand. Improving conditions have spilled over into inflation expectations, with the 5-year breakeven rate at a four-month high after bottoming in mid-March.
If all this translates into a hawkish tone shift in BOE rhetoric, the British Pound is likely to rise amid rebuilding rate hike speculation. As it stands, futures markets price in the first post-crisis increase in the benchmark lending rate in the first quarter of 2016. We remain short EURGBP.
The Australian Dollar outperformed in overnight trade, rising as much as 0.8 percent on average against its leading counterparts. The move followed the release of first-quarter CPI figures that showed the core year-on-year inflation rate unexpectedly rose to 2.3 percent. That marked the first increase since the second quarter of last year.
As we discussed in our weekly forecast, a break from disinflation seen in the second half of last year may delay further interest rate cuts from the RBA. Indeed, the Aussie rallied alongside a jump in front-end Australian bond yields, pointing to the outcome’s supportive impact on the monetary policy outlook.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
23:50
JPY
Trade Balance (¥) (MAR)
229.3B
44.6B
-425.0B
23:50
JPY
Trade Balance Adjusted (¥) (MAR)
3.3B
-409.3B
-573.2B
23:50
JPY
Exports (YoY) (MAR)
8.5%
8.5%
2.5%
23:50
JPY
Imports (YoY) (MAR)
-14.5%
-12.6%
-3.6%
0:30
AUD
Skilled Vacancies (MoM)
0.4%
–
0.8%
0:30
AUD
Westpac Leading Index (MoM) (MAR)
-0.3%
–
0.1%
1:30
AUD
CPI (QoQ) (1Q)
0.2%
0.1%
0.2%
1:30
AUD
CPI (YoY) (1Q)
1.3%
1.3%
1.7%
1:30
AUD
CPI – Trimmed Mean (QoQ) (1Q)
0.6%
0.6%
0.7%
1:30
AUD
CPI – Trimmed Mean (YoY) (1Q)
2.3%
2.2%
2.2%
1:30
AUD
CPI – Weighted Median (QoQ) (1Q)
0.6%
0.5%
0.7%
1:30
AUD
CPI – Weighted Median (YoY) (1Q)
2.3%
2.3%
2.3%
2:00
AUD
Conference Board Leading Index (MAR)
317.6
–
317.1
European Session
GMT
CCY
EVENT
EXP
PREV
IMPACT
8:30
GBP
Bank of England Minutes
–
–
High
9:00
CHF
Credit Suisse ZEW Survey Exp. (APR)
–
-37.9
Medium
9:15
EUR
Germany’s Spring Economic Forecasts
–
–
Medium
14:00
EUR
Consumer Confidence (APR A)
-2.5
-3.7
Medium
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EURUSD
1.0484
1.0605
1.0670
1.0726
1.0791
1.0847
1.0968
GBPUSD
1.4687
1.4803
1.4864
1.4919
1.4980
1.5035
1.5151
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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Source: Daily fx