Pound to Look Past Claims Data, US Dollar Set Sights on CPI Report

Talking Points:

British Pound Unlikely to Find Lasting Driver in March Jobless Claims Data
US CPI Figures Probably Don’t Have Scope to Meaningfully Boost US Dollar
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UK Jobless Claims data headlines the economic calendar in European hours. Expectations point to a 25.5k drop in applications for benefits. Such an outcome would fall broadly on-trend and so seems unlikely to generate a significant response from the British Pound in that it would do little to augment investors’ BOE policy outlook. Traders will likely have to wait for the release of minutes from the central bank’s April meeting next week for the next major inflection point on the domestic front.

Later in the day, the spotlight shifts to the March set of US CPI figures. The core year-on-year inflation rate is expected to register at 1.7 percent, unchanged from the prior month. Traders will look to the outcome to inform continued speculation about the timing of the first post-QE Federal Reserve interest rate hike. A print north of expectations may weigh against the recent dovish shift in the priced-in outlook, offering a lifeline to the US Dollar after three days of aggressive losses. Leading survey data points to weakness on the pricing front however, warning that a soft result may keep the greenback under pressure into the week-end.

The Australian Dollar underperformed in overnight trade, sliding as much as 0.4 percent on average against its leading counterparts. The move tracked a slide in Australia’s benchmark 10-year bond yield. Price action on both fronts may be little more than a correction following the surge in borrowing costs as well as the Aussie following an impressively strong jobs report yesterday however, so the probability for follow-through seems suspect.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

5:00

JPY

Consumer Confidence Index (MAR)

41.7

41.3

40.7

European Session

GMT

CCY

EVENT

EXP/ACT

IMPACT