Swiss and Norwegian central banks to make their decisions in the morning
Will Bank of England surprise markets with more hawkish message?
Oil traders watch out, OPEC meeting kicks off today!
Monetary policy enthusiasts will be delighted while looking at today’s economic calendar as several central banks from Europe are scheduled to make their decisions on interest rates. Swiss National Bank will start the marathon followed by Norges Bank. On top of that we have Bank of England decision. Moreover, OPEC meeting kicks off today therefore oil traders should remain cautious as any rumours surfacing may spur additional volatility on Brent and WTI.
8:30 am BST – Swiss National Bank decision. Despite quite a decent pick-up in the producers’ inflation (PPI) in the past months the consumers’ measure (CPI) was unable to accelerate in a similar fashion. In turn the latest CPI reading showed just a lacklustre 1% YoY, way below the SNB’s target of about 2%. However, it should be noticed that the Swiss CPI inflation sits at its highest levels since the beginning of a second quarter of 2011. Today’s meeting is not expected to deliver any changes to the level of interest rates yet the press conference (9:30 am BST) may offer some insight in to the moods of central bankers.
9:00 am BST – Norges Bank decision. While the Swiss CPI inflation remains low the same cannot be said about the Norwegian measure. It is true that the latest reading showed a deceleration from 2.4% YoY to 2.3% YoY yet it is important to note that it is still above the Norges Bank’s target of 2%. In the second quarter Norwegian krone lost over 4% against the US dollar but it was mainly caused by the USD rally. In fact, in the G10 basket NOK was one of the most resilient currencies to the greenback. Today’s decision is expected to leave the interest rates unchanged at 0.5%.
12:00 pm BST – Bank of England decision. In the first quarter of 2018 the UK economy performed poorly growing only 0.1% QoQ and 1.2% YoY. This, along with lacklustre readings of soft indicators and more dovish comments from BoE members, has greatly cut the market expectations for any rate hike in the first half of the year. Right now the OIS-implied probability of a rate hike suggests that such a move shall not take place before the final quarter of the year. The Bank of England is widely expected to leave interest rates unchanged yet it should be noted that Governor Carney likes to surprise the markets.
After a test of 38.2% Fibo level GBPUSD resumed downward movement smashing through the support zone and 50% retracement level. A test of the swing levels from October at 1.3040 may be on cards in case BoE does not provide relief for the pound. Source: xStation5