Economic calendar: Inflation day

Summary:

  • Swedish central bank’s decision will start the day

  • Inflation readings from the UK and the US

  • DoE will release its numbers on US crude inventories

8:30 am GMT - Riksbank’s rate decision: After rising interest rates in late 2018 the Riksbank has altered its stance thereafter suggesting that the next increase is unlikely before the second half of this year. Looking at the market-based likelihood one may notice that market participants assign a bit more than 50% for a rate hike scenario by the year-end. Today’s meeting will serve as a checkpoint in assessing whether the economy outlook has materially changed in recent weeks.

9:30 am GMT - UK inflation data for January: When it comes to the UK economy it’s all about Brexit. The GDP data for the last quarter of 2018 we got earlier this week showed the gloomy numbers. It was the clear sign that the UK economy keeps feeling pressure coming from Brexit-related uncertainty. Chaos surrounding Brexit negotiations is unprecedented and it is not affecting the UK economy positively. Therefore, today’s inflation data should be taken with a grain of salt. Keep in mind that the Bank of England left rates unchanged last week and revised down the outlook for economic growth for this year. The consensus points to 1.9% YoY in terms of headline and core price growth.

1:30 pm GMT - US inflation data for January: The US dollar has thrived well in recent days but its strength may be exaggerated. Now the rosier outlook when it comes to US-China trade negotiations could act in favour of better performance of EM currencies. If so, the US dollar may give back some its appeal. In turn, monetary policy in the US is unlikely to be altered in the first half of this year therefore today’s data is very unlikely to be a game changer. This is especially true when we take into account low expectations. Headline price growth is slated to have grown 1.5% YoY in January driven by lower fuel prices, whereas core price should show a 2.1% YoY rise.

3:30 pm GMT - DoE oil inventories: Yesterday, the OPEC decided to cut its demand forecast for its crude due to abundant US oil supply. On the other hand the API report proved to be ambiguous. Oil prices are rising 0.9% this morning. The consensus suggests that US oil inventories grew 1.6 million barrels last week. Gasoline inventories are expected to have increased 1 million barrels.

Central bankers:

  • 8:55 am GMT - ECB’s Lane

  • 10:00 am GMT - Riksbank’s Ingves

  • 10:00 am GMT - ECB’s Villeroy

  • 1:50 pm GMT - Fed’s Mester

  • 1:50 pm GMT - Fed’s Bostic

  • 2:00 pm GMT - ECB’s Visco

  • 5:00 pm GMT - Fed’s Harker

  • 7:10 pm GMT - RBNZ’s Orr

The GBPUSD is trading close to its 75DMA awaiting the inflation data from the US and the UK. Source: xStation5
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