FX markets have seen a volatile week. A week in which the USD suffered heavily but managed to claw back partial losses after many high tier releases including non-farm pay rolls, UK General Elections and Fed Chair Janet Yellen speaking. This week markets will continue to digest last week’s turbulence, in particular the Conservatives victory in the UK elections. We also have key data released in the form of German GDP, UK labour data, Mark Carney’s speech and US consumer data.
Busy start to the week as the delayed (due to the UK election) BoE meeting takes place with no change expected. In addition, the Eurogroup meets in Brussels with the aversion of a Greek tragedy high on the agenda.
The UK’s secondary sector releases its numbers and is expected to continue growing, albeit at a slower pace than last month. Meanwhile news wires from the ECOFIN meeting and US job opening numbers will keep the market interested.
Big day for Sterling as the UK employment numbers are set for release. However, the big event will be the BOE inflation report which the market will decipher for clues on when interest rates will go up. There will be additional interest after two members stated they were close to voting for a hike last month. In the US the retails sales will keep the market busy.
Slightly quieter day on Thursday but the US jobless claims will be scrutinized after last week’s non-farm payrolls.
Given the backdrop of sentiment in the US at the moment, Friday’s data will be analysed by the hawks for any signs of hope for a June interest rate hike. The markets have pushed this back to September but the Fed have left the door ajar.