Summary:

  • UK inflation reading to be released in the morning

  • House of Lords will vote on the Brexit draft in the afternoon

  • Bank of Canada to make its interest rate decision today

Bank of Canada’s decision that is scheduled for the afternoon is the major macroeconomic event today. However, investors’ attention may turn to the GBP as not only UK inflation report is going to be released but also the first one of six meetings concerning Brexit theme will be held today in the House of Lords. Today UK’s future in the EU customs union will be decided thus the outcome of the ballot may spur additional volatility on the GBP. Moreover, 45 minutes ahead of the votings three BoE FPCs will testify to the UK Treasury Committe.

9:30 am BST – UK, Inflation for March and House Price Index for February. Last month’s inflation report from the UK economy has shown a little deterioration in the pace of price growth as it slid from 3% YoY to 2.7% YoY. Nevertheless, the inflation remains well above the target set at 2% thus a rate hike might be coming soon in order to prevent inflation getting out of control. Markets asses the probability of the hike during next meeting at around 86% therefore today’s reading may strengthen expectations even further. Economists surveyed by Bloomberg suggest that the inflation could remain on the prior level of 2.7% YoY and deteriorate a little in MoM terms, from prior 0.4% to 0.3%. Simultaneously to the inflation reading the one concerning house prices in February will be released and it is expected to slid from 4.9% YoY in the last month to 4.7% YoY.

3:00 pm BST – UK, Brexit Bill votings in the House of Lords. UK Prime Minister Theresa May have found herself in a hard position ahead of the Parliament’s Upper Chamber Votings. Lords are divided when it comes to the customs union topic. On one hand PM May promised hardline Brexiteer Tory MPs a clean Brexit resulting in withdrawal of all agreements including customs union while on the other she faces strong opposition from the Pro-European Lords that are in majority and are most likely reject the current draft. This will be the first one of six meetings concerning the Brexit theme. The other are scheduled to take place on 23rd, 25th and 30th of April and on 2nd and 8th of May.

3:00 pm BST – Bank of Canada Decision. After poor first quarter of the year Canadian dollar managed to recoup some of its loss to become the top trading G10 currency against USD in April. Easing Trade War concerns and better housing and labour market data can be named as a reasons behind this. Moreover, the latest inflation print has seen a pick-up in the pace of the price growth moving further above the level of 2% that marks BoC inflation target. It seems like Canadian central bankers have all that they need in order to justify rate hike yet markets see the probability of the rate hike during this meeting at just 20%. At 4:15 pm BST a post-meeting conference will be held thus investors may have to prepare for increased volatility on the CAD tied FX pairs. 

Central bank speakers scheduled for today:

1:30 pm BST – Fed’s Dudley

2:15 pm BST – BoE’s Brazier, Kohn and Taylor

8:15 pm BST – Fed’s Dudley

9:15 pm BST – Fed’s Quarles

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The long lasting upward trend on GBPCAD was halted by the 1.8415 in the late-March. The rethoric of Canadian central bankers and the outcome of Brexit votings in the Upper Chamber of UK Parliament may be decisive for the pair’s future. Source: xStation5