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BoE rate hike next month may not be a done deal; Trump slams OPEC over high oil prices

Apr 23 • Morning Roll Call • 261 Views • No Comments

As soon as the investors through that next month BoE rate hike is a done deal, Governor Mike Carney hampered the deal unexpectedly. According to Bloomberg, Carney stated that he does not want to be too focused on the precise timing and is concentrating on the more general path, while Britain should prepare for a few interest rate raises on the course of the next few years. The expectations of May rate hike were rendered by mixed data and according to Mark Carney, he is positive that there will be differences of view, which will be considered early next month during the Bank’s Monetary Policy Committee meeting. As soon as the comments came out, British government bond prices and the expectations of a May rate hike fell below 50% from initial 70% earlier last week.

As PWC Senior Economic Adviser, Andrew Sentence noted, there is a high probability that all 4 external MPC members will vote for a May rate hike, but it is still to see if they can get 1 or 2 internal vote to support them. Broadbent and Haldane are seen as main candidates to push for the rate rise, so it is advised to keep a close look on their statements within a week or so. In addition, the analysts from Nomura still expect a hike in May, while Bank of America Merrill Lynch analysts are skeptical of the need for a May hike. According to Unicredit economists, this week’s 1Q18 GDP report could be decisive and the rate hike is still likely, however it is a much closer call than what the investors were expecting.

On Friday, the US President, Donald Trump has criticized OPEC for raising oil prices, stating that there is no justification for the move and the prices were artificially raised, which would not be accepted. In addition to this, the oil prices have been gaining for two consecutive weeks. As CNBC has reported, WTI oil prices have hit a 3 year high above $69 a barrel last week and were trading above $68 on Friday. Reports have also shown that Saudi Arabia wants oil prices to reach $80 to $100 a barrel so as to boost the eventual initial public offering of Saudi Aramco (Saudi Arabia’s state Oil Company). As President Donald Trump tweeted, he is against the very high Oil prices, it is not good and will not be accepted.

Monday does not see any high impact macroeconomic news from the Eurozone, with Manufacturing and Services PMI, followed by the German Bundesbank (Buba) monthly economic report. Canadian wholesale sales data and Markit flash manufacturing and services PMI readings from the US will commence the NA session; followed by the US existing home sales. In addition, investors will be looking at the Parliamentary testimony from the Bank of Canada (BOC) Governor Poloz and Deputy Governor Wilkins regarding the near-term trading opportunities in the CAD.

 

ECONOMIC CALENDAR EVENTS FOR APRIL 23rd

EUR French Flash Manufacturing PMI
EUR French Flash Services PMI
EUR Flash Manufacturing PMI
EUR Flash Services PMI
EUR German Buba Monthly Report
USD Existing Home Sales

 

 

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