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Pound May Rise on UK CPI, US Dollar Focused on Fed-Speak

Pound May Rise on UK CPI, US Dollar Focused on Fed-Speak

Talking Points:

  • British Pound may rise as upbeat UK CPI data boosts BOE policy outlook
  • Fed-speak to set the stage as the US Dollar eyes key data later in the week
  • Aussie and NZ Dollars rise, Yen falls as risk appetite firms in Asian trade

UK CPI figures headline the economic calendar in European trading hours. The core inflation rate is expected to edge higher to 1.3 percent in March, the highest in three months. UK price growth figures have firmed relative to forecasts so far this year, opening the door for a still stronger outcome.

Leading PMI data bolsters the case for a firm print. March surveys show that output prices in the service sector, which makes up nearly 80 percent of the economy, rose at the fastest pace in over two years. A stronger print could help the nascent recovery in priced-in BOE policy bets, boosting the British Pound.

Later in the day, Fed-speak returns to the spotlight by way of comments from Patrick Harker, John Williams and Jeffrey Lacker, Presidents of the Philadelphia, San Francisco and Richmond branches of the US central bank respectively.

Recent Fed rhetoric appears geared realigning official and market-based policy bets with the goal of making for a smooth hike at the June sit-down. To that end, officials will need to develop the narrative that external headwinds – while worrisome – remain a possible rather than realized threat to the policy outlook.

This may lay the groundwork for a rebuilding of 2016 tightening expectations if this week’s news-flow continues a recent trend of outperformance relative to consensus forecasts. Reports on US retail sales, CPI and consumer confidence are due to cross the wires.

The sentiment-geared Australian and New Zealand Dollars rose alongside stock prices while the anti-risk Japanese Yen declined in overnight trade. The MSCI Asia Pacific regional benchmark equity index rose 0.3 percent.

What do DailyFX analysts expect from markets in Q2? Find out here !

Asia Session

23:10NZDREINZ House Sales (YoY) (MAR)8.2%-5.7%
23:30AUDWeekly Consumer Confidence Index (APR 10)112.0-113.4
23:50JPYBank Lending Incl Trusts (YoY) (MAR)2.0%-2.2%
23:50JPYBank Lending Ex-Trusts (YoY) (MAR)2.0%-2.2%
01:30AUDCredit Card Balances (AUD) (FEB)51.9b-50.9b
01:30AUDCredit Card Purchases (AUD) (FEB)24.8b-21.9b
01:30AUDNAB Business Conditions (MAR)12-8
01:30AUDNAB Business Confidence (MAR)6-3
01:30JPYBOJ Harada speaks in Shimonoseki ---
06:00JPYMachine Tool Orders (YoY) (MAR P)-21.2%--22.5%

European Session

06:00EURGerman CPI (MoM) (MAR F)0.8% (A)0.8%Medium
06:00EURGerman CPI (YoY) (MAR F)0.3% (A)0.3%Medium
08:30GBPCPI (MoM) (MAR)0.3%0.2%High
08:30GBPCPI (YoY) (MAR)0.4%0.3%High
08:30GBPCPI Core (YoY) (MAR)1.3%1.2%High
08:30GBPRPI (MoM) (MAR)0.3%0.5%Low
08:30GBPRPI (YoY) (MAR)1.4%1.3%Low
08:30GBPRPI Ex Mort Int. Payments (YoY) (MAR)1.5%1.4%Low
08:30GBPPPI Input NSA (MoM) (MAR)2.3%0.1%Low
08:30GBPPPI Input NSA (YoY) (MAR)-6.2%-8.1%Low
08:30GBPPPI Output NSA (MoM) (MAR)0.2%0.1%Low
08:30GBPPPI Output NSA (YoY) (MAR)-1.0%-1.1%Low
08:30GBPPPI Output Core NSA (MoM) (MAR)0.1%0.2%Low
08:30GBPPPI Output Core NSA (YoY) (MAR)0.3%0.2%Low
08:30GBPONS House Price (YoY) (FEB)-7.9%Medium

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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