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Sterling may have survived the U.K. retail sales miss in the previous session, but it fell victim to BOE head Carney’s less hawkish remarks this time. Meanwhile, the dollar extended its gains on the back of another pickup in U.S. bond yields.

  • Canadian ADP non-farm employment change up from 16.2K to 42.8K
  • Philly Fed manufacturing index up from 22.3 to 23.2 vs. 20.8 forecast
  • U.S. initial jobless claims down from 233K to 232K vs. 230K forecast
  • U.S. CB leading index at 0.3% as expected, 0.7% previous
  • BOE Gov Carney: U.K. seeing mixed economic data
  • Carney: There are “other meetings this year” for rate hikes
  • FOMC member Mester: Rate hikes appropriate this year and the next
  • Mester: U.S. is “slightly beyond” full employment
  • BOE MPC member Cunliffe: Worried that trade tensions could spill over
  • Japanese national core CPI and tertiary industry activity index due next

Major Events/Reports:

Carney dampened BOE hike expectations

As though the recent U.K. data disappointments weren’t enough to weigh on tightening expectations, BOE head honcho Carney put another nail in the coffin with his not-so-upbeat remarks.

In an interview with the BBC, Guv’nah Carney acknowledged that the U.K. had some mixed data, reminding market watchers of the recent misses on retail sales, CPI, and the average earnings index. He didn’t really drop any strong hints for a rate hike next month, mentioning instead that there are also “other meetings” this year.

In particular, Carney spoke about softer retail sales and how the looming Brexit has dampened business investment. Furthermore, Carney highlighted the uncertainties involved in this breakup, citing:

“The biggest set of economic decisions over the course of the next few years are going to be taken in the Brexit negotiations and whatever deal we end up with. And then we will adjust to the impact of those decisions in order to keep the economy on a stable path.”

On a less downbeat note, Carney did say that markets should “prepare for a few interest rate rises over the next few years” but that he doesn’t want to “get too focused on the precise timing” since it’s more about a general path.

U.S. bond yields surge again

Economic reports from the U.S. came in more or less in line with expectations, but it was the strong climb in bond yields that lifted the dollar against its peers once more.

  • 5-year yield rose 2.6 basis points to 2.756%
  • 10-year yield climbed 3.9 basis points to 2.911%
  • 30-year yield surged 4.1 basis points to 3.101%

Initial jobless claims ticked slightly lower from 233K the other week to 232K last week, still a bit higher compared to the 230K consensus. The Philly Fed index came in better than expected with a rise from 22.3 to 23.2 instead of falling to 20.8. The CB leading index posted a 0.3% uptick as expected.

Crude oil hits a roadblock

Black Crack took a pause from its steep climb after the OPEC acknowledged that the supply glut is nearly gone.

The oil cartel had a Joint Technical Committee meeting in Jeddah with non-OPEC producers this week, and an insider shared that the panel found that inventories in developed nations in March were at just 12 million barrels above the five-year average.

Oman’s oil minister Mohammed bin Hamad Al Rumhi, however, maintained that there is still oversupply in the market.

  • WTI crude oil fell 18 cents to $68.29 per barrel
  • Brent crude oil settled at $73.78 per barrel

Major Market Mover(s):

GBP

The pound was unable to stay afloat when BOE Governor Carney acknowledged softer retail sales and dampened hopes for an interest rate hike in May.

GBP/USD slid from a session high of 1.4246 to a low of 1.4068, GBP/JPY dropped like a rock from 152.96 to 151.10, EUR/GBP popped up to .8760, and GBP/CAD slumped to 1.7950.

USD

The Greenback brought sexy back thanks to record gains in U.S. bond yields and mostly upbeat remarks from FOMC members.

USD/CHF continued its ascent to a high of .9716, EUR/USD sank from 1.2381 to a low of 1.2328, AUD/USD tumbled to a low of .7729, and NZD/USD fell from .7306 to a low of .7259.

Watch Out For:

  • 11:30 pm GMT: Japanese national core CPI (dip from 1.0% to 0.9% eyed)
  • 4:30 am GMT: Japanese tertiary industry activity index (0.1% rebound from earlier 0.6% drop expected)