Carney’s rate rise comments weakened Pound

The Pound weakened last week after Bank of England Governor, Mark Carney’s comments caused doubts over a May rate hike. It has been expected that the Bank of England would raise rates to 0.75% on the 10th May, the second hike in just over seven months. However, comments Carney made on Thursday evening made the markets doubt their expectations. In his comment, he mentioned how the BOE were ‘conscious that there are other meetings’ in which in the BOE could raise hikes this year. The comment came a day after UK inflation was shown to have slowed to 2.5% from 2.7% last month.

The UK Government has insisted the UK will be leaving the European Union Customs Union after Britain leaves the EU next year. However, it is believed Prime Minister, Theresa May could be forced to U-turn and keep the UK within the Customs Union. Parliament are scheduled to debate and vote on the topic in Parliament this week, and it looks likely the House of Commons will vote in favour for the Customs Union. This would follow a similar vote in the House of Lords last week, when they voted in favour of the UK staying within the custom union. The vote in Parliament this week is not a legally binding one, but will give the markets a glimpse of what the trade deal could look like.

Monday

Today will start with Flash Manufacturing PMI and Flash Services PMI from the Eurozone. They are expected to post 57.6 and 53 retrospectively, remaining relatively static from last month’s figures. Two of the Eurozone’s largest economies, France and Germany will also be releasing their individual versions of the PMIs. Both PMIs from these countries are also expected to remain stable. Across the pond, the US will be releasing their Existing Home Sales figure from March which is expected to uptick to 5.55M. In Canada, Bank of Canada Governor, Stephen Poloz will be giving the first of his two testimonies this week. The first will be before the House of Commons Standing Committee on Finance. It is expected he will maintain a cautious view, as he worries the rising inflation might only be temporary.

Tuesday

On Tuesday, the UK will be releasing the Public Sector Net Borrowing figure, which is expected to increase from -0.3b in February to 1.1b in March. In the EU, the German Ifo Business climate report is scheduled to be released. The index is forecast to post a relatively stable figure of 104.7. In the US, the Conference Board Consumer Confidence report will be released, expected to score slightly lower than last month at 126. The US will also be releasing the New House Sales figure, which is expected to increase to 625k from 6118k.

Wednesday

Wednesday will be a quieter day, with little high tier data on the economy docket. In Canada, the Bank of Canada Governor, Stephen Poloz will be testifying before the Standing Senate Committee on Banking, Trade and Commerce alongside Senior Deputy Governor, Carolyn Wilkins. In the US, the Crude Oil Inventories will be released.

Thursday

On Thursday, the markets focus will be on the Eurozone as the European Central Bank meet. The meeting will be followed by a press conference. In the previous meeting, the ECB removed the wording that would allow for an increase in the volume of bond buying from their statement. However, ECB President, Mario Draghi tried to down play the hawkish move in the following press conference. It is unlikely the ECB will make any changes in this meeting, so the markets will be looking for any hawkish hints from Draghi that the ECB are on the right track to continue reducing quantitative easing. Across the pond, the US will be releasing the durable goods orders. Durable goods order posted a bullish 3% increase for February, however it is expected the increase will drop 1.3% for March. The Core Durable Goods Order will also be released, expected to post 0.5%.

Friday

Friday will start with the release of the prelim GDP figure from the UK. The annualised figure is expected to remain static at 1.4%. However, the markets will be watching closely to see if this reading will follow the CPI and Retail Sales which disappointed markets last week with their bearish readings. Later in the day, Bank of England Governor, Mark Carney will be speaking at the launch of the BOE’s econoME education program. In the Eurozone, the Spanish Flash CPI and GDP figures will be posted, expected at 1.2% and 0.7% retrospectively. Across the pond, the US will be releasing their advance GDP figure. It is expected GDP has expanded by 2% for the first quarter of the year, compared to 2.9% for quarter four of 2017. It is often seen that the GDP figure slows in the first quarter of the year, as spending eases. Friday will end with the release of the University of Michigan Consumer Sentiment and inflation expectation reports. Consumer Sentiment is expected to uptick slightly to 98, from 97.8 previously.