Summary:

  • Nuclear Deal with Iran to be the main theme on the markets this week

  • Bank of England may be set to disappoint markets with its next decision

  • Many central bankers are expected to deliver speeches today

Oil prices saw another multi-year high at the beginning of May amid a tense geopolitical situation that could lead to a deficit of the commodity. This week could be absolutely crucial for oil prices as president Trump will decide on the future of the Nuclear Deal with Iran. On the FX front investors will await the Bank of England decision and inflation data from the US. Monday as usual is quiet in terms of macroeconomic releases. No major readings are planned for today therefore investors attention may turn to the monetary authorities as vast array of central bankers is scheduled to deliver their speeches.

Central bank speakers scheduled for today:

9:00 am BST – BoC’s Lane

10:30 am BST – Riksbank’s Jochnick

1:25 pm BST – Fed’s Bostic

7:00 pm BST – Fed’s Barkin

8:00 pm BST – BoC’s Lane

8:30 pm BST – Fed’s Kaplan

8:30 pm BST – Fed’s Evans

What to watch for the remainder of the week?

Nuclear Deal with Iran (Full week)

How can one complain about high oil prices and then drive these prices up through his own actions? Welcome to the Trump World. The major reason behind the lastest surge in oil prices is a fear that Trump will not sign a waiver on sanctions on Iran on May 12, re-open a serious conflict in the Middle East and cause a deficit of oil, especially Brent. Nearly all the parties agree that Iran has fulfilled its part of the deal and urge Trump not to break it but it looks like domestic politics in the US may take a leading role. Oil traders, prepare for a bumpy week! Affected markets: OIL, OIL.WTI.  

Bank of England decision (Thursday, 12:00pm GMT)

Just few weeks ago a hike in May looked like a done deal. However, a situation has reversed since then: lower inflation, softer business surveys, dovish talk from governor Carney, all this not only removed expectations for the hike at this meeting but pushed such prospects into the late autumn. The Bank will not only take a decision on rates but also publish the quarterly Inflation Report. Could it hide anything that would restore faith in the pound? Affected markets: GBPUSD, EURGBP.

US data on inflation  (Thursday, 1:30pm GMT)

CPI report may be even more important the the latest payrolls or the GDP pints. Let us recall that inflation inched up to 2.4% in March and there are all the reasons to expect another rise in April. First of all the base effect is lower and April print will capture the effect of higher oil prices. The higher the inflation the greater fear of more interest rate hikes. Affected markets: EURUSD, US500.

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 Oil prices are marching higher and higher backed by the fundamentals and geopolitical tensions. During the strong downward move in 2014 a $77.50 handle was a subject to some price action and therefore bulls may look to regroup there. Source: xStation5