UK: Weekly FX Market Update 3 April

GBP

• Bank of England (BoE) Governor Bailey announces that the UK banking sector is well positioned to surmount any global banking worries.

• With UK inflation at 10.4% can the BoE really be at the end of its rate hike cycle?

• We have a Bank Holiday shortened week, with the US announcing jobs data when the UK is on holiday. Could this induce a volatile market?

EUR

• Eurozone Core CPI was firm again last week, rising by 5.7%, a new record for the Eurozone. Does this news keep the ECB on course to hike again in early May?

• ECB’s Muller stated that the ECB has ‘room to raise rates’ – a reason for further Euro bullishness?

• The collapse of Credit Suisse was one step removed from the Eurozone. Has confidence in Europe’s banking sector been damaged?

• EURUSD gained 3% in March. Can this positive sentiment now move into April and see price test resistance at 1.1035?

USD

• What will Non-Farm Payrolls bring this Friday, in a holiday affected market?

• Personal Consumption Expenditure remained firm, rising by 4.4% from last year’s data.

• Fed Vice-Chair Barr managed to calm the equity markets nerves last week with his testimony to Congress, however, the US Dollar has continued to weaken.

• Has the recent US bank volatility caused a lasting loss of confidence in US banking & could this lead to US$ weakness?

• Ellen Zenter, chief US economist at Morgan Stanley said, ‘You always have to worry about what evil lurks around the corner’.

Events for the week ahead:

Mon Apr 3

15:00 USD ISM Manufacturing PMI

Tue Apr 4

05:30 AUD RBA Cash Rate

10:15 GBP MPC Tenreyro Speaks

17:30 GBP MPC Pill Speaks

Wed Apr 5

03:00 NZD NBNZ Cash Rate

03:30 AUD RBA Lowe Speaks

15:00 USD ISM Services PMI

Thu Apr 6

13:30 CAD Employment Change

Fri Apr 7

All Day UK Bank Holiday

13:30 Average Hourly Earnings/Non-Farm Payrolls/Unemployment Rate