The Vernal equinox, which marks the start of the season of spring, occurs tomorrow- superstition has it that it is the only time you can successfully balance an egg upright due to the Earth’s position relative to sun - coincidentally there are at least seven Central bank meetings around this same time - would this "tilt of the planet" help policy makers find balance in their stance? Unless you believe egg can stand upright.
ECB waiting for more data on evolution of wages- in this context, important to track EZ Q4 labour costs tomorrow- however ECB’s timelier indicator of negotiated wage rates for Q1 on May 23, just before June 6 ECB -roughly 85% odds of 25 bp rate cut priced. - lots of ECB speakers this week - Centeno today -EURUSD reversed three consecutive weeks of gains. Dovish ECB and Hawkish Fed should see 21 dma at 1.0866 breaking for 1.0695.
SNB on Thursday. Cut likely but consensus does not expect - CHF vulnerable to the downside this week from dovish surprise.
Commercial banks set their Loan Prime Rates Wednesday. The 1- and 5-year LPRs are expected to remain at 3.45% & 3.95%. Monetary policy has pretty much reached the limits of what it can do in deflationary environment - so further easing less likely.
Feb CPI Wednesday key - BoE Thursday - Haskel could switch his vote from a 25 bp hike to a hold. Mann will likely stay the course favouring a 25 bp rate hike while Dhingra should maintain her preference for a 25 bp cut. GBPUSD supported at 1.2730 Fri low -1.2706 50% 1.2518-1.2894 break to see sharp decline.
Despite the flurry of reports that BOJ may hike this week, base case is for them to keep the policy rate at -0.10% & stick with its 10-year JGB yield target of “around” 0% with 1% as an upper bound reference. BOJ would definitely terminate its guideline to purchase ETFs and J-REITs - redundant considering the BOJ has not bought ETF/J-REITs since Oct 23 & stock market had rallied to a 34-year high. Friday global range 148.03-149.17 as per script. Believe in a hawkish Fed to weigh more here - 151.93 coming.
It’s a Gutfeel trade - rationally 83.00 test should happen.