The US Dollar continued to make gains last week after the Fed minutes revealed that June is plausible for a “lift off” for interest rates. Both the Euro and Sterling moved lower against the Greenback for differing reasons as they both face their own individual headwinds. The outlook of a hung parliament continues to weigh on Sterling and is likely to stay well past the election on 7/05/15. Meanwhile, concerns continue to surround the Euro region as central banks diversify reserves. A study last week showed that Euro Reserves held by central banks have dropped from 28% (5 years ago) to 22% this year.
Very little data is set for release today. The only figures have come from China and New Zealand.
Key readings are set for release from both sides of pond which could impact on the timing of a US interest rate hike. From the UK, the market will be keen to see if the headline inflation drops below zero. In the US, retail sales are expected to bounce back from last month’s negative number.
Due to the disruption from the Easter break the ECB hold their interest rate meeting today instead of the usual first week of the month. No change in policy is expected but as always the key focus will be on the press conference that follows.
Data and speakers from the US will be the main focus of the day. Employment, housing data and Philly Fed manufacturing is due for release. In addition, two influential FOMC members (Lockhart and Fisher) are due to speak, their tone on the economy could give further clues on when the “lift off” of rates begins. Two days of G20 meetings begin.
We started the week with key data from the UK and US and we are ending it that way as well. Whilst the G20 meeting continues key employment data from the UK and important inflation readings from the US are set for release.