GBP

There were no major moves for sterling against its major currency peers on Wednesday and it remains steady in early trading. The pound showed little reaction to the release of the Federal Reserve Bank minutes yesterday evening which showed that the central bank was preparing to move more aggressively to head off inflation. Market attention later today will focus on Bank of England’s Chief economist Huw Pill’s speech at the international Conference on Sovereign Bond Markets for comments on future policy. Earlier this morning, mortgage lender Halifax released their monthly house price survey, which showed prices growing strongly again in March. The survey showed prices grew 1.4% month-on-month last month, the biggest rise in six months and the ninth consecutive month of increases. Halifax said the rise reflected too many buyers chasing too few homes coming to the market, but it warned a growing squeeze on household finances might dampen house price growth in the months ahead.

EUR

The euro remains pressurised, within a tight range against the dollar in early trading. The single currency has been vulnerable over the past few days amid an escalation of recession fears due to the Ukraine conflict. Later this morning, the minutes from the European Central Bank’s last meeting will be released giving insights regarding the stance of members delicate balancing act to manage soaring inflation and slowing growth in March. Prior to their release, European Governing Council member and Bundesbank President has said this morning that inflation in the eurozone is high and the central bank may soon need to raise interest rates as a result, adding that the bloc can’t allow high prices to become entrenched.

USD

The dollar is steady this morning, trading near a two-year high against a basket of major currencies. The greenback remains underpinned after the minutes from the Federal Reserve Bank’s last meeting showed many policymakers were prepared to hike rates in 50 basis point increments over the coming months. There was also general agreement about cutting $95 billion per month from asset holdings, which had ballooned during the pandemic . Although this was largely in line with market expectations, members preparedness to begin as soon as May was regarded as “hawkish” and is likely to keep the dollar elevated for now. This afternoon and this evening speeches by Fed members James Bullard, Raphael Bostic, Charles Evans and John Williams will be scrutinised for further clues on future policy.

Economic Calendar

10.00 EUR Retail sales (YoY) (Feb)
12.30 EUR ECB Monetary Policy Meeting Accounts
13.15 BOE’s Pill Speech
13.30 USD US initial Jobless claims
14.00 USD Fed’s Bullard speech
19.00 USD Fed’s Bostic speech
19.00 USD Fed’s Evans speech
21.05 USD Fed’s Williams speech