Market movers today
Focus continues to be on Scandinavian inflation with release of the Swedish figure for April. We estimate inflation took a leap up, above the Riksbank's estimate due to seasonality in the price of travel but this should be temporary. See more on page 2.
The European Commission is set to publish its updated economic projection and we will keep an eye on its estimate of the structural unemployment rate (NAIRU), as this is highly important for when wage pressure will pick up. In our view, NAIRU in the periphery countries is likely to be revised lower as it is currently estimated to be higher than prior to the financial crisis despite the labour market reforms in these countries. See Research: Euro area wage growth should stay subdued, not supporting core inflation significantly , 5 May.
In the afternoon, attention turns to the Bank of England (BoE) meeting, which includes policy announcement, minutes, the Inflation Report and a press conference. We do not expect any policy changes - hence, the interesting part will be the policy stance after the neutral stance was maintained but included a hawkish twist at the latest meeting. We expect the BoE to remove this hawkish twist again as GDP growth slowed to 0.3% q/q against its nowcast of 0.6%. Note that yesterday we published a strategy piece about the upcoming UK election, see FX Strategy: UK snap election not a catalyst for a higher EUR/GBP , 10 May.
Brent oil is back above USD50/bbl and the market will focus on the release of OPEC's monthly oil market report. In particular, it will look for details on the level of compliance to the output cut deal as well as comments on the potential extension of cuts in H2.