Summary:
- SNB, Norges Bank and BoE to announce rate decision today
- UK retail sales expected to decline in February
- Theresa May meets EU leaders in Brussels
3 European central banks will announce interest rate decision today. SNB will launch marathon, followed by Norges Bank and Bank of England. However, only Norwegian central bankers are expected to make change to interest rate levels. Apart from that, retail sales reading from the UK will be released so elevated volatility on the GBP market may be spotted in the morning. Last but not least, UK assets may be volatile throughout the day as the UK Prime Minister Theresa May will meet EU leaders in Brussels (Brexit discussion set to start at 2:30 pm GMT).
8:30 am GMT - SNB interest rate decision. The Swiss National Bank has kept its main interest rate at extreme low level for a few years already. Thomas Jordan and other Swiss central bankers have little reasons to change such stance given disappointing economic growth in the final quarter of 2018. However, a long period of negative rates may have created a bubble on the Swiss housing market, a concern that was voiced in the recent government forecasts. Having said that, investors should look for hints on the housing market condition in the statement.
9:00 am GMT - Norges Bank interest rate decision. While early-2019 production data from Norway was somewhat disappointing, price growth in the Nordic country was very robust. Indeed, we saw a slowdown in February but it was from 3.1% YoY to 3% YoY! Such a high inflation gives Norges Bank reasons to deliver a hike rate and it is exactly what it is going to do today. Norwegian central bankers already said they will raise main rate to 1% so we should not expect a surprise. However, press conference at 9:30 am GMT may offer some more insight into the future.
9:30 am GMT - UK, Retail sales for February. Data from the United Kingdom released earlier this week was quite strong - wage growth held steady at 3.4% YoY while CPI accelerated to 1.9% YoY. Turmoil around Brexit undermined business confidence but did it also hit consumer confidence? Retail sales data may provide an indirect answer to this question. Market consensus expects a decline of 0.4% MoM and a slowdown from 4.2% YoY to 3.3% YoY.
12:00 pm GMT - Bank of England interest rate decision. The UK central bankers are not in the best spot to deliver any changes to monetary policy. The everpresent Brexit uncertainty requires Bank of England to be double cautious in order not to make withdrawal from EU even more damaging. Having said that, it is expected that rates will be left unchanged with a unanimous decision. Note that markets do not price a single rate hike this year.
NOK managed to gain some ground against the USD during the past dozen session. In turn, USDNOK pulled back towards the key support zone around 8.47 handle. Norges Bank rate hike is likely to be already priced in therefore a break lower may depend on whether more hawkish guidance is offered or not. Source: xStation5
