Summary:
- Theresa May has time until 12 April to get parliament’s support
- European CPI inflation for March set to see daylight on Friday
- German IFO indices to be released today
The United Kingdom was set to leave the European Union on Friday, 29 March, but the deadline was eventually pushed back 2 weeks. Brexit turmoil is therefore likely to dominate news headlines not only this week but for a bit longer as well. Elsewhere, data on the European price growth may be a chance for the common currency to recover while oil price is likely to be impacted by the DOE report.
Readings scheduled for today:
- 9:00 am GMT - Germany, IFO business climate for March. Expected: 98.5 pts, previous: 98.5 pts
- 1:30 pm GMT - US, Dallas Fed manufacturing index for March. Expected: 9.6 pts, previous: 13.1 pts
Central bank speakers scheduled for today:
- 9:15 am GMT - ECB’s Costa
- 9:30 am GMT - ECB’s Cpeire
- 10:00 am GMT - Fed’s Harker
- 9:15 pm GMT - RBA’s Ellis
What to watch for the remainder of the week?
Brexit (whole week)
Despite a few “meaningful” votes and quickly approaching deadline still nothing is sure in the Brexit case. EU leaders granted PM May time until 12 April to get backing of parliament for the deal and allow extension until 22 May. In case she fails, no-deal Brexit remains baseline scenario. Another vote in the UK parliament is expected to be held this week. Having said that, the upcoming week may be crucial for the United Kingdom but one should be aware that it is not the first such week and may not be the last one either. Affected markets: GBPUSD, UK100.
European CPI inflation (Friday, 10:00 am GMT)
While slow price growth was often viewed as a hurdle for the ECB, it may now become its ally. Last week’s plunge in PMIs suggests that the European economy may need more stimulus in case slowdown prolongs. With low inflation ECB may have more room for such measures as it would not risk price growth getting out of control accidentally. Nevertheless, such a move could dent expectations of euro rebounding anytime soon. Affected markets: DE30, EURUSD.
Data from the oil market (Wednesday, 2:30 pm GMT)
Oil prices managed to push higher last week thanks to significant decline in the US oil inventories as well as more pledges from OPEC+ to continue with supply cuts until at least June this year. Another solid report from DOE could help Brent and WTI distance away from current trading ranges. Seasonality seems to support this scenario as early-spring is usually marked by drops in oil inventories. Affected markets: OIL, OIL.WTI.
GBPUSD runs short on space in between the upward sloping trendline and the resistance zone ranging around 1.33 handle hinting that a break out of current trading range may be looming. Clarity on whether we will see a no-deal exit or extension until 22 May could be a trigger for such a break but keep in mind that further extensions may be on the cards in case the UK parliament remains undecided. Source: xStation5
