Did FED members really push for 2 more rate hakes?

Economic Events Brief, April 10 – US CPI, UK GDP, ECB Policy & FOMC in Highlights

Posted Wednesday, April 10, 2019 by
Arslan Butt • 3 min read

On Wednesday, financial markets are likely to exhibit extreme volatility over high-end economic events. UK GDP, ECB monetary policy, US inflation rate and FOMC meeting minutes remain on the radar.

So far, the dollar index seems in trouble as it has dropped to its lowest in more than a week, while Wall Street’s main indexes sank after the IMF global growth forecast.

The IMF lowered its global growth forecasts for 2019 and signaled growth could reduce further if trade tensions persist and if Britain makes a chaotic exit from the European Union.

On the other hand, demand for gold soared after a piece of news that China, the world’s biggest gold consumer, increased its gold reserves for a fourth straight month in March. By the way, Turkey also increased its holdings.

Top Economic Events Today

GBP – UK GDP m/m

The Office for National Statistics is forecast to release the GDP figure at 8:30 GMT. The UK publishes GDP growth data every month. Despite Brexit, the economy kicked off the year by growing by 0.5% m/m, a robust rate. Further moderate growth of 0.2% is on the cards for February.

The elements of growth are also of concern: Manufacturing Production, which jumped by 0.8% in January, is projected to improve by hardly 0.2%, while Construction Output is estimated to fall by the same scale.

EUR – ECB Monetary Policy Decision

ECB Press Conference – Traders, the price action in Euro solely depends upon the ECB monetary policy meeting which is due to come out at 11:45 GMT. The consensus is for policymakers to keep interest rates steady and halt the quantitative easing program as assured.

ECB President Mario Draghi may present recent comments about the economic situation. There have been some indications of a recovery in some places, but the overall portrait remains anxious.

Besides that, the ECB will also update economic growth and inflation projections. Nevertheless, the economic indicators aren’t showing signs of recovery and political risks are still on the cards.

Main Refinancing Rate – The ECB is expected to hold its pledge to keep rates at present levels, at least till the summer of 2019. For your info, presently the ECB’s key lending rate (refinancing rate) holds at 0%.

USD – CPI m/m

At 12:30 GMT, the Bureau of Labor Statistics is scheduled to release US inflation data. The Consumer Price Index has slowed down lately due to falling energy prices, but it could now pick up again. Economists are expecting a slight rise in inflation which is sort of a favorable situation for the US dollar.

Month over month, a surge of 0.3% is forecast after 0.2% beforehand.

On the other hand, the Core CPI also slipped, staying around 2.1% y/y. It is anticipated to remain at 2.1% on an annual basis, but a rise of 0.2% is on the cards this month.

USD – FOMC Meeting Minutes

At 18:00 GMT, the US Federal Reserve will release the FOMC meeting minutes. Let us recall, the US Federal Reserve adopted a dovish tone in its March meeting by indicating no rate hikes in 2019 and declaring the early termination of the balance sheet compression program in September.

Chair Jerome Powell revealed worries about the global economy but seemed sure about the US economic growth. Thus, the meeting minutes may drop further light on the reason behind such a move and will present more data on the level of worry among officials. It may also reveal how FOMC members interpret the trade war and the consequences of a trade war on the US economy. Comments on inflation and growth will be watched closely.

So buckle up to ride the volatility and keep following FX Leaders for new trade setups!

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