EUROPEAN SESSION

In the European session, the main highlight is the monthly UK GDP report. The consensus sees a 0.2% expansion in January. The data isn’t going to change anything for the BoE or the markets as the focus remains on the US-Iran war and especially on the rising oil prices. At the moment, the market doesn’t expect the BoE to cut at all this year, on the contrary, there’s a 90% chance of a rate hike priced in. For context, before the war started, traders were pricing more than two rate cuts.

We will also get the French and Spanish inflation reports, but these will be the final readings so the market is going to ignore them. Money markets are fully pricing an ECB rate hike by July and see an 85% chance of a second rate hike by December. This is of course due to the higher energy prices.

AMERICAN SESSION

In the American session, the highlights include the Canadian Employment report, the US PCE price index, the second estimate of the US Q4 GDP, the University of Michigan Consumer Sentiment survey and the US Job Openings data.

The Canadian employment report is expected to show 10K jobs added in February compared to -24.8K loss in January, and the Unemployment Rate to increase to 6.6% vs 6.5% in the prior month. Again, the data isn’t going to change anything as expectations are being shaped by the US-Iran war and the supply disruption in the Strait of Hormuz. The market is fully pricing a rate hike by September and an 80% chance of a second rate hike by December.

The US PCE price index for January is expected at 2.9% vs 2.9% prior for the headline Y/Y figure and 3.1% vs 3.0% prior for the Core Y/Y measure. The second estimate of the US Q4 GDP is expected to match the preliminary Q/Q growth of 1.4%. The University of Michigan Consumer Sentiment is seen contracting to 54.6 vs 56.6 prior, and the US Job Openings are seen increasing to 6.750M vs 6.542M prior.

This is all pre-war data and therefore old news at this point…