EU Agree To 6 Month Extension

GBP

Late last night European Union leaders agreed to give Britain six more months to leave the bloc, more than Prime Minister Theresa May says she needs but less than many in the bloc wanted, thanks to fierce resistance from France. German Chancellor Angela Merkel insisted that Britain would not be forced out and that a chaotic no-deal departure must be avoided.

Summit chair Donald Tusk and others argued that obliging May to accept a much longer deadline than the June 30 date she had sought could help swing pro-Brexit hardliners within her own Conservative party behind her deal, fearing a long delay could see the British public turning against a withdrawal altogether.

EUR

The European Central Bank kept its policy unchanged as expected on Wednesday, maintaining interest rates at record lows and keeping its guidance for steady interest rates this year despite a sharp slowdown in economic growth. “We continue to expect the key interest rates to remain at their present levels at least through the end of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to our objective.”

ECB President Mario Draghi said economic data was weak and confirmed policymakers were considering if measures were needed to mitigate the impact on European banks of the central bank’s negative deposit rates.

USD

Data showed U.S. consumer prices increased by the most in 14 months in March but underlying inflation remained benign against a backdrop of slowing global economic growth. The softer inflation reading may add to signals the Fed may have longer to wait before price gains firm around their 2 percent objective. A tight labor market has helped boost wages, though policy makers also confront a slowing economy and a weaker global growth outlook.

The central bank’s Federal Open Market Committee voted unanimously to not raise its benchmark rate at the March 19-20 gathering, and simultaneously indicated that it didn’t see a likelihood for any hikes through 2019. However they left room for the possibility of interest rate increases before the end of the year, should economic conditions improve, according to minutes from the session released last night. This came after a discussion in which members said they would be watching the data on an economy most of them expected to improve through the year.

Key Announcements

13:30 - USD: Initial Jobless Claims; Forecast higher than previous at 211K from 202K
13:30 - USD: PPI m/m; Forecast at 0.3% from previous 0.1%