American FX Outlook: US Inflation And FOMC Minutes Headline

What you need to know before markets open

• China’s inflation indices decelerated sharply in March with CPI falling 1.1 percent over the month in March.
• The UK manufacturing output fell 0.2 percent over the month in February, missing the market expectations but Sterling remained elevated with the Bank of England rate hike hopes anchoring the currency.
• The UK trade balance improved in February reaching a deficit of less than £1 billion in February.
• The US inflation data headline Wednesday with core inflation expected to accelerate to 2.1 percent over the year in March while late afternoon the FOMC March meeting minutes will be released disclosing the details of policymakers discussion as they voted in favor of last rate hike.

Wednesday’s market moving events

• ECB Governing Council meets for a non-monetary policy meeting.  
• ECB President Mario Draghi is scheduled to speak at the Generation €uro Students’ Award Ceremony, in Frankfurt at 11:00 GMT.
• The US CPI excluding food and energy is expected to increase 0.2 percent in March while accelerating to 2.1 percent y/y from 1.8 percent y/y in February.
• FOMC minutes are set to disclosed detail of discussion from the last meeting.

Major market movers

• The US Dollar traded lower against EUR and GBP while retreated against Yen and stayed little changed against the antipodeans.
• Russian ruble extended its slump and credit risk climbed with foreign investors cutting their holdings during the latest wave of uncertainty stemming from the US sanctions.
• The US Dollar is in the spotlight with inflation data and FOMC minutes due.

Earlier in Asia/Europe

• China’s inflation fell -1.1 percent m/m in March while decelerating to 2.1 percent over the year.
• China’s factory gate inflation rose 3.1 percent y/y in March, down from 3.7 percent in previous month.
• The UK manufacturing output unexpectedly swings to negative -0.2 percent m/m while increasing 2.5 percent over the year in February.
• The UK industrial production increased 0.1 percent m/m while rising 1.6 percent y/y in February.
• The UK trade balance reached a much better than expected deficit of - £965 million in February.
• Fitch Ratings warned of the key risk to shipping is if protectionist measures by US and China escalate into trade war damaging prospects for global trade and GDP growth.