Are we gearing up for a US rate hike lift off?

Rhetoric from key officials kept markets entertained last week, whilst data disappointed across the globe. Sterling received a boost on Wednesday following the BoE minutes which revealed that two members considered voting for a rate hike. Meanwhile, both the greenback and Euro were under pressure for different reasons. Data from the US was relatively soft resulting in interest rate expectation being pared. In the Eurozone, the ongoing saga with Greece continued to drag on. On Friday, tension escalated with the Greek Finance Minster being labelled as an “amateur” and a “time waster” in the Eurogroup meeting.

The main focus this week will be the FOMC meeting on Wednesday, where we will find out if we are likely to see a “lift off” in interest rates. In addition there will be heavy focus on the first release of the GDP numbers from the US and UK. Inflation numbers released from Europe will be under heavy scrutiny later on in the week.

In Europe it is a shortened week as the majority of European markets close on Friday for Labour Day, whilst the UK is on bank holiday next Monday.

Monday

A quiet start to the week with only the UK CBI Industrial Orders set for release.

• UK CBI Industrial orders

Tuesday

UK GDP is expected to slow slightly from 0.6% to 0.5% whilst there will be a lot of focus on the consumer confidence in the US with the next move in interest rates being openly signposted to the market.

• UK GDP (Q1)
• US consumer confidence

Wednesday

A key day for the US Dollar with the release of the GDP numbers and the FOMC meeting. Growth in the US is expected to slow to 1.0% (this may be attributed to the big freeze in Q1). Meanwhile, the headlines will no doubt be from the FOMC as markets get ready to decipher clues as to whether or not they will initiate “lift off” at their next meeting in June.

• German consumer price index
• UK CBI Realised sales
• US GDP (Q1)
• FOMC Interest rate meeting

Thursday

Inflation from the Eurozone will grab the attention of the market today as last month’s reading entered deflationary territory.

• JPY Interest rate meeting
• Eurozone consumer price index
• US Jobless claims

Friday

Liquidity will be lighter as the majority of the EU nations (including France and Germany) are closed for Labour Day. Manufacturing data is set for release across the time-zoned markets with Chinese, British and American manufacturing all hitting the wires.

• CNY Manufacturing
• UK Manufacturing
• US ISM Manufacturing