Summary:
- Inflation readings from EMU and the US
- Monthly GDP from the Canadian economy
- Some central bank speakers on the agenda as well
(tentative) - UK Parliament will hold another Brexit vote
10:00 am BST - EMU inflation for March (preliminary): German inflation released yesterday showed lower than expected numbers being a confirmation for the European Central Bank to stick to its dovish notion. The consensus before today’s reading for the Eurozone economy points to a 0.9% YoY increase in headline inflation, down from 1% seen in the previous month. If price growth slows even more, it could act to the detriment of the shared currency which is hovering a tad above its critical technical level of 1.12.
12:30 pm BST - monthly Canadian GDP for January: There is no doubt that the Canadian economy is heavily dependent on what is happening in the US. Given the fact that the Federal Reserve has decided to stop rising borrowing costs, at least for this year according to the dot-chart, it could affect monetary policy in Canada as well. Obviously, the surprisingly strong economic data may make the BoC feeling more comfortable in delivering more rate hikes this year. That’s will be a key for the loonie’s performance of the rest of the year. The consensus points to a 0% MoM rise after a 0.1% MoM rise in December.
12:30 pm BST - US PCE and personal income/spending: The US dollar has lost somewhat of its appeal following the latest Fed’s decision to stop lifting borrowing costs and shrinking its balance sheet. Having in mind the current Fed’s reaction function we think that the Fed could be more willing to cut rates than hike them. This reaction function could change if inflation accelerates abruptly which will not be the case in our view. The consensus shows PCE core inflation rose 1.8% YoY in January. Personal income for February could have grown 0.3% MoM, while personal spending for January may have grown 0.3% MoM.
Central bank speakers:
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9:45 am BST - ECB’s Coeure
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2:30 pm BST - Fed’s Kaplan
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4:05 pm BST - Fed’s Quarles
The USDCAD is approaching the important technical from where the price reversed three months ago. Source: xStation5
