- UK parliament to vote on revised Brexit deal
- Sweden and the United States to release inflation readings for February
- API data expected to show moderate build in oil inventories
London will be in focus on Tuesday as the UK parliament will provide more clarity on the future and shape of the Brexit process. Elsewhere, USD and SEK traders will follow CPI inflation readings closely to see whether it could make Fed or Riksbank more hawkish. Last but not least, API will publish oil inventory estimates in the late evening.
Brexit vote (evening) and UK data (9:30 am GMT)
The UK members of parliament will vote on the revised Brexit deal today. Prime Minister May managed to win some concessions from the EU yesterday aimed at ensuring lawmakers in London that the Irish backstop is not a permanent solution. The vote will be held in the evening byt traders may want to tune in much earlier as PM May is expected to hold cabinet meeting in the morning and MPs will discuss revised deal throughout the day. However, rejection still remains the most likely option. In case the UK lawmakers choose not to back the deal, new votes will be held tomorrow and on Thursday on whether to leave EU without a deal or delay Brexit. Apart from that, a pack of the UK data, including manufacturing and industrial production for January, will be released today at 9:30 am GMT but it is possible that this release will be largely ignored by markets amid key political votes.
Other readings scheduled for today:
8:30 am GMT - Sweden, CPI inflation for February. When we take a look at the latest data from Sweden we can see quite a rosy picture. Economic growth in the final quarter of 2018 was stronger than expected and January’s retail sales recovered from December’s drop. Even after Swedish inflation slowed in January, countries from euro area can only dream of such robust price growth Sweden has. In turn, markets expect Riksbank to deliver one rate hike by year’s end. However, a major deceleration in inflation metrics may be more than enough to derail such expectations. Market consensus expects core gauge to remain unchanged at 2% YoY while headline measure should tick higher from 1.9% YoY to 2% YoY.
12:30 pm GMT - US, CPI inflation for February. When Jerome Powell said over the weekend that he is especially interested in the retail sales reading to see whether slump in December was just a one-off, he seemed to play down the significance of the latest NFP report. However, it does not look possible that he will similarly play down today’s inflation print. The US price growth slowed significantly during the past few months providing Fed with comfort of staying patient in terms of rate hikes. Nevertheless, this deceleration can be mostly ascribed to changes in energy and food prices as core CPI gauge barely moved during past half a year. FOMC will hold quarterly meeting (with forecast release) next week and a bunch of key US readings scheduled for this week may help assess Fed’s next move. Price growth is expected to maintain previous pace.
8:40 pm GMT - API report on oil inventories. Oil surged yesterday following Saudi Arabia’s announcement to extent deeper output cuts into April. In turn, Brent (OIL) moved back to the upper limit of the current consolidation range. Some weakness was spotted later on therefore trading range may be upheld in the nearby future. However, strong price impulse generated by, for example, inventories data could help price break into uncharted territory. API report is expected to show a 2.8 mb build in inventories.
Central bank speakers scheduled for today:
- 10:45 am GMT - ECB’s Lautenschlaeger
- 12:45 pm GMT - Fed’s Brainard
GBPUSD bounced off the short-term upward sloping trendline yesterday. The move was triggered by upbeat Brexit news and cause the pair to surge almost to 1.33. Nevertheless, when it comes to politics nothing should be taken for granted as lawmakers are still likely to reject the deal. Source: xStation5