European FX Outlook: What does Mr. Sauders like? When the Bank will hike, the Bank will hike!

What you need to know before markets open

• The trinity of important UK macroeconomic indicators scheduled for this week all came in below expectations with March UK retail sales falling -1.2% m/m in March making the first quarter negative -0.5% Q/Q knocking some 0.03 percentage point off Q1 UK GDP growth.
• The Bank of England Governor Mark Carney said that current Brexit related uncertainty could delay rate hikes, causing Sterling to fall below 1.4100.
• The Bank of England hawk Michael Saunders voting in tandem with Ian McCafferty in favor of rate hike in March and long before first rate hike in a decade materialized last November is scheduled to speak in Scotland in support of his policy view.
• German Bundesbank President and the hottest candidate for ECB President position replacing Mario Draghi in late 2019 is set to speak at the annual IMF and the World Bank conference.
• Canada’s inflation and retail sales are scheduled for the North American session together with Fed speakers.

Friday’s market moving events

• German PPI is expected to increase 0.2% m/m in March while rising 2.0% y/y.
• The Bank of England Monetary Policy Committee member Michael Saunders (voting in favor of rate hike in March) is scheduled to speak at the University of Strathclyde's Fraser of Allander Institute, in Glasgow at 9:30 GMT.
• German Bundesbank President Jens Weidmann is scheduled to speak at the press conference at the International Monetary Fund's Spring Meeting, in Washington DC at 11:30 GMT
• Canada’s CPI is expected to accelerate to 2.4% y/y in March with core CPI rising 1.4% y/y.
• Canada’s retail sales are seen rising 0.3% m/m in March.
• Chicago Federal Reserve Bank President Charles Evans is due to speak about current economic conditions and monetary policy at the Graaskamp Center Conference in Chicago at 13:40 GMT.
• European Commission’s economic confidence indicator is expected to fall to -0.2 in April, tracking the slowdown of most of the forward-looking indicators.
• San Francisco Federal Reserve Bank President John Williams is scheduled to participate in a Fireside chat at the University of California Berkeley-Fischer Center for Real Estate and Urban Economies in Pebble Beach, California at 15:15 GMT.

Major market movers

• Sterling took another hit on Thursday, falling as low as 1.4068 after the Bank of England Governor comments that indicated lower willingness to act on the rate in May.
• The US Dollar is trading slightly higher on Dollar index basis against majors with gains concentrated against antipodeans AUD and NZD.
• Data thin Europe is seen trends expected to continue with sentiment driving the market.

Thursday’s macro summary

• Australian employment rose 4.9K only, missing the expectations of a 20.4K increase in March
• The Eurozone current account recorded a surplus of €35.1 billion in February, down from €37.6 billion in January
• The UK retail sales are seen falling 0.5% over the month in March while increasing 2.0% y/y at the same time.
• The US Federal Reserve Governor Lael Brainard said it is too early in the economic cycle to revisit calibration of core capital and liquidity requirements for large banks.
• The US initial jobless claims reached 232K in the week ending April 13.
• Philadelphia Fed manufacturing survey unexpectedly accelerated to 23.2 in April.
• Canada’s ADP employment report saw 42.8K new jobs added in March compared with 16.2K in February.
• Federal Reserve Vice Chairman for Supervision Randal Quarles delivered a testimony before the Senate Banking Committee on regulatory reforms.
• The Bank of England Governor Mark Carney said the UK should get ready for a few interest rate rises over the next few years. Carney said “I don't want to get too focused on the precise timing, it is more about the general path” confirming that the interest rate hike is “likely” this year although Brexit uncertainty could delay interest rate rise. In terms of economics, Carney said the productivity growth is not increasing, which will limit the rate at which people's wages can pick up.
• Cleveland Federal Reserve President Loretta Mester said: ”if the economy evolves as I anticipate, I believe further increases in interest rates will be appropriate this year and next year.”