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British Pound May Rise as BOE Meeting Minutes Reboot Rate Hike Bets
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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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