UK inflation the highlight on the data docket today

Read full post at forexlive.com

The dollar is keeping in a steadier mood as we approach European morning trade. Meanwhile, equity futures are mildly higher while bond yields are staying underpinned. It’s pretty much been a consolidative start to the week, all things considered.

Looking to the session ahead, inflation data is in focus as we will be getting the UK release and the final reading for the Eurozone in March. The former will be the more important one as such, so let’s take a look at what to expect.

Headline annual inflation is estimated to drop to 3.1% from 3.4% in February. Meanwhile, core annual inflation is estimated to decline from 4.5% to 4.1% last month. The latter is the more vital statistic but with it still holding above 4%, that’s not likely to give the BOE too much comfort yet.

Looking at rate cut odds, traders are pricing in a 71% probability of a move in August. As for the year itself, there are 42 bps worth of rate cuts priced in now. Honestly, barring a drop in core prices below 4%, I don’t see the data today moving the needle all too much. But if price pressures remain more stubborn i.e. anything circa 4.3% or higher, I can see that leading to a nudge higher in the pound as traders pare back August bets.

0600 GMT – UK March CPI figures
0900 GMT – Eurozone March final CPI figures
1100 GMT – US MBA mortgage applications we. 12 April

That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.