Morning Commentary & Currency Insights – April 18, 2018

Sterling has put in a short term top having dropped after soft inflation numbers this morning and slower wage growth Tuesday have taken the steam out of expectations of another rate hike from the BoE in May and beyond.  Elsewhere the dollar is broadly higher on the back of perceived calm in geopolitical & domestic concerns in the U.S., creating an opportunity for players to reassess global affairs.  UK retail sales data out on Thursday is the only other economic release on tap for the remainder of the week that will garner attention other than Canadian releases mentioned below.

The Bank of Canada is front & center this morning with both their Monetary Policy Report & rate announcement being released at 10 AM EST followed by a press conference at  11:15 AM EST this morning.  No rate movement is expected however, close attention will be paid to the MPR as whispers on the street are saying a positive vibe is anticipated given recent improving data including the stronger CPI prints in February & March.  The market is also anticipating Friday’s CPI release and if it comes out in line with the last 2 strong numbers the CAD should rally in anticipation of a BoC hike at the end of May.  Coincidentally we have very large option expiries at 10 AM EST this morning located at 1.2600 & 1.2650 so we may see some volatile movement directly preceding these events.