Dollar hits a 10 month low as US inflation continues to drop

The Greenback plummeted Friday afternoon, with the Dollar Index Spot hitting a 10-month low, due to a poor inflation figure and a drop in retail sales from the US. The US CPI figure posted flat, dropping US inflation to 1.6%, the lowest rate since November. The bearish figures raised doubts in the markets over further tightening from the Fed this year. After the data releases, FOMC member, Robert Kaplan, spoke at the Centre for Economic Studies of the Private Sector, where he said he would like to see more evidence of progress before they consider raising rates further. The dovish tone furthered the Dollar’s drop.

Back in the United Kingdom, the UK have acknowledged for the first time on paper that they will need to pay an exit fee to the EU, which could be up to €100 billion. In a written statement, the Government stated they would work with the EU to determine a fair settlement of the UK’s rights and obligations as a departing member state.

The second round of talks are set to take place this week, although the UK’s ambition seems unclear, as the Cabinet are split on the how the divorce should go.

Monday

There is a quiet start to this week, with no high tier data coming out of the Eurozone, UK or US. The US will be releasing some lower tier data in the form of the Empire State Manufacturing Index which looks at the manufacturing levels within the New York State.

- US Empire State Manufacturing Index

Tuesday

Tuesday sees the release of the CPI figure from the UK. With inflation currently at 2.9%, the Bank of England are split as to whether to raise interest rates in order to help bring inflation back down to the targeted level of 2%. An increase in inflation could nudge the MPC members who are currently ‘on-the-fence’ to vote for a rise next month. A lower reading could take the pressure off.

- AUD Monetary Policy Meeting Minutes

- GBP CPI

- GBP RPI

- Eurozone Final CPI

Wednesday

On Wednesday the focus will be on the US with the release of the building permits figure, which is the annualised number of new residential building permits issued during the previous month. Wednesday also sees the release of the weekly Crude Oil Inventories.

- US Building Permits

- US Crude Oil Inventories

Thursday

On Thursday the ECB will release the minimum bid rate decision. The rate is expected to remain flat, although there is a press conference scheduled afterwards, which the markets will be looking to Mario Draghi for clues as to what the Central Bank will do next. Across the pond, the US will release the weekly Unemployment Claims and Philly Fed Manufacturing Index.

- UK Retail Sales

- Eurozone Minimum Bid Rate

- ECB Press Conference

- US Unemployment Claims

Friday

There is a fairly quiet end to the week, with no high tier data being released from the Eurozone, UK or US. The UK will be releasing a piece of lower tier data, in the form of the Public Sector Net Borrowing, expected to drop to 4.3b from 6b currently.

- UK Public Sector Net Borrowing