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Will Bank of Canada hike rates?

business-articlesWill Bank of Canada hike rates?
  • UK inflation to hold steady?
  • BoC rate decision ahead
  • Uptick in employment may lift AUD
UK Inflation in focus

The UK will publish its latest consumer price index (CPI) this morning, with the figures likely to be the final deciding factor in whether the Bank of England (BoE) raises interest rates next month.

Today’s data is expected to show that the UK’s inflation rate held steady at 2.7% in March, with the pound likely to strengthen as the robust figures suggest the BoE will remain on track to hike interest rates in May.

After UK wage growth was shown to have outpaced inflation in February, markets are also likely to be relieved that inflation isn’t set to climb again on hopes the squeeze in real wages is finally over.

Will BoC strike a more hawkish tone today?

All eyes will be on the Bank of Canada (BoC) this afternoon, following the conclusion of its latest policy meeting.

While the BoC is not expected to make any alterations to its monetary policy this month some investors are optimistic about the chances of a more upbeat economic assessment from the bank.

After raising interest rates back in January, an increasingly dour outlook from the BoC has dragged on the Canadian dollar in the past couple of months as markets questioned whether there was still a case for an additional hike this year.

However with oil prices recently striking a three-year high, inflation rising and NAFTA talks appearing to be making some positive progress, markets will be hoping to hear a more hawkish tone from the bank today.

Potential slide in unemployment may bolster AUD

The Australian dollar may punch higher later tonight with the release of the country’s latest labour report.
Economists forecast the data will show that the domestic unemployment rate slipped back down from 5.6% to 5.5% in March as employment expanded by 20,000.

With the Reserve Bank of Australia (RBA) placing considerable emphasis on the need for unemployment to drop before it begins tightening monetary policy, the decline will likely be welcomed by AUD investors.

However the ‘Aussie’ could still find itself on the back foot early on Thursday as some analysts suggest the uptick in employment will be mainly driven by part-time contracts.

Upcoming Data

Wednesday, 18 April, 2018
09:30                     GBP Inflation
15:00                     CAD BoC Rate Decision  

Thursday, 19 April, 2018
02:30                     AUD Unemployment Rate
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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