EUROPEAN SESSION
In the European session, the main highlight was the UK CPI report. The headline figure matched the rate seen in January but core inflation was slightly higher than expected. Services CPI came in at 4.3% Y/Y which is 0.2% above the BoE’s forecast. Anyway, this is February’s data, so it’s old news.
We will see higher headline inflation in the coming months due to the energy price shock caused by the US-Iran war and the disruption in the Strait of Hormuz. If energy prices remain elevated for longer, we could see core inflation rising as well and then the central bank will have to choose from stagflation or increasing interest rates and likely trigger a recession.
We have also the German IFO today but again, don’t expect the market to care much about the March data because everyone knows that inflation is going to be higher and growth indicators will weaken. The IFO is also generally correlated with the German Composite PMI, so the data will likely come in lower than expected today.
AMERICAN SESSION
In the American session, we just have the US import/export prices on the agenda which are not going to change anything for the market as the focus turned to US-Iran negotiations.
The most important thing is that negotiations are now looking real. Late yesterday, Israeli Channel 12 reported that a month-long ceasefire will be announced while US-Iran hold negotiations on 15 crucial points. Markets reacted positively on the news but didn’t really extend the gains as traders are now waiting for the Iranian side to accept or reject the proposal.
CENTRAL BANK SPEAKERS
- 08:45 GMT/04:45 ET – ECB’s President Lagarde (neutral – voter)
- 09:15 GMT/05:15 ET – ECB’s Lane (neutral – voter)
- 12:00 GMT/08:00 ET – ECB’s Rehn (dovish – voter)
- 12:00 GMT/08:00 ET – BoE’s Greene (hawkish – voter)
- 13:45 GMT/09:45 ET – ECB’s Kocher (neutral – voter)
- 16:30 GMT/12:30 ET – ECB’s Villeroy (neutral – voter)
- 20:10 GMT/16:10 ET – Fed’s Miran (dove – voter)
