Bullish Retail Sales from the US helped give the Dollar a slight boost on Friday. However, it failed to provide any substantial uplift to the Greenback, with GBP/USD pushing higher and erasing all of the service sector’s hard work yesterday. Although the US Retail Sales figure exceeded expectations, markets are still sceptical on a rate rise this summer. The Greenback has now returned to the range that dominated during April and is likely to be more range bound for the time being.
Yesterday’s docket was relatively light as the Eurozone powerhouses Germany and France were closed in observance of Whit Monday, leading to slightly less liquidity in the Euro. Across the pond, the US released the Empire State Manufacturing Index, a survey which asks Manufacturers in New York to rate the current business conditions. The Empire State Manufacturing Index posted a disappointing -9.0, indicating worsening conditions of New York’s secondary sector.
Inflation figures will be today’s main focus with the UK releasing their yearly CPI figure this morning, followed by the US posting their monthly figure in the afternoon. Firstly, the UK CPI figure which currently sits at 0.5%, well below the BoE’s target of 2%, is expected to remain at 0.5%. Last week, BoE Governor Mark Carney stated that the committee do not expect to reach their 2% anytime soon, this has cooled any expectations of a rate rise for the UK in the near future. The monthly CPI from the US, is forecast to increase from 0.1% to 0.4%, if this happens it could give some much needed support to the Dollar.