UK Inflation Miss and BoC Rate Hold Ahead of Powell
Markets opened the day digesting a softer-than-expected UK inflation print and gearing up for pivotal rate commentary from the Bank of Canada and Fed Chair Powell later today. UK CPI came in cooler across the board, reinforcing bets that the Bank of England is edging closer to policy easing. Attention now turns to U.S. retail sales, Canada’s rate decision, and Powell’s speech, which could set the tone for global markets heading into the second half of April.
Key Events – Wednesday, April 16
UK Inflation (Mar):
- CPI YoY: 2.6% (vs 2.7% expected)
- CPI MoM: 0.3% (vs 0.4%)
- Core CPI YoY: 3.4% (as expected)
The slight downside surprise gives the Bank of England more breathing room, with GBP easing slightly on the data.
U.S. Retail Sales (Mar):
- Market expects a solid rebound (1.3% MoM forecast) after February’s modest rise.
- Core/control group sales data will be closely watched for consumer demand strength.
This data could impact Fed expectations just hours before Powell’s 17:30 GMT speech.
Bank of Canada Decision (13:45 GMT):
- BoC is expected to hold at 2.75%, but all eyes are on the press conference and policy statement for guidance on future rate cuts.
- With Canadian inflation cooling and GDP softening, dovish tones could weigh on the loonie.
Commodities
Oil
- WTI: $60.90 (-0.70%)
- Brent: $64.23 (-0.68%)
Crude prices remain under pressure, weighed by mixed demand outlooks and stronger-than-expected U.S. stockpiles reported earlier this week.
Metals
- Gold: $3,295.75 (+1.38%)
- Silver: $32.87 (+1.46%)
Both metals are surging, with gold hitting new record highs, supported by falling U.S. yields, geopolitical uncertainty, and continued dollar softness.
Currency Movements
- EUR/USD – The euro is climbing for a third day, up 0.88% to 1.1382. The EUR/USD exchange rate continues to benefit from broad dollar weakness and stable eurozone inflation.
- GBP/USD – Sterling trades at 1.3279, up 0.37%, recovering after earlier losses following the UK CPI miss. The GBP/USD pair remains resilient, but signs of cooling inflation are starting to shift BoE rate expectations.
- AUD/USD – The Australian dollar is steady at 0.6352 (+0.11%), supported by stronger gold prices and steady risk sentiment. The AUD/USD rate continues to trend higher in April despite China-related headwinds.
- NZD/USD – The kiwi is up 0.41% to 0.5922, with the NZD/USD pair riding a four-week rally backed by improved global growth sentiment and dovish Fed bets.
- USD/JPY – Yen strength continues as USD/JPY drops 0.72% to 142.18. Lower U.S. Treasury yields and soft retail expectations are favouring haven currencies.
- USDCHF – The Swiss franc is gaining, with USD/CHF down 1.18% to 0.8140, reflecting continued risk-off flows and support for European safe havens.
- USDCAD – The Canadian dollar is marginally firmer ahead of the BoC, with USD/CAD down 0.25% to 1.3919. If the central bank signals cuts are near, expect pressure on the loonie.
- USDMXN – The peso is gaining again, with USD/MXN down 0.23% to 20.06. Strong real yields and broad USD softness keep the Mexican peso among the best performers in emerging markets.
- USDINR – The rupee edges higher, with USD/INR down 0.19% at 85.56, supported by energy price stability and modest foreign inflows.
- USDCNY – The yuan is flat at 7.3274, with the USD/CNY pair holding steady as markets await clearer signs of Chinese stimulus or growth momentum.
Market Outlook
The stage is set for a big afternoon, with U.S. consumer data and Canada’s rate decision likely to drive immediate volatility, followed by Jerome Powell’s comments at 17:30 GMT. If Powell maintains a cautious stance, gold and equities may continue to rally, while the dollar stays under pressure. Weak UK inflation opens the door for BoE doves, while CAD traders will be glued to every word out of the BoC’s press room.