What’s been happening?

UK: Good news for the UK yet again this morning in terms of data. Overnight BRC Retail Sales came in at the highest level since April 2017 showing an increase of 2.3% YoY. Halifax house prices also came in better than expected. Sterling is still well bid this morning but is struggling to break out of its current trading range. We may see further pound strength should the BoE decide to take definitive action regarding interest rates next month. It is still unclear at present if the BoE has an interest, no pun intended, in increasing rates in May. In a recent poll investor sentiment suggested that there is an 82% chance of a hike next.

EU: As mentioned yesterday Germany is becoming a concern in relation to economic figures it has posted of late. German data in the form of exports disappointed again yesterday posting the weakest figure since Feb 2015.  Considering this poor data, the euro still managed to hold firm bolstered by calm words from Draghi in relation to equity market concerns. The market still awaits Draghi speaking on Wednesday and ECB minutes on Thursday.

US: US equity markets moved higher sparking greenback weakness. Trade war concerns still weigh heavily on the dollar and Fed Reserve Bank of Dallas Kaplan stated yesterday that the dispute between the US and China is not going to be resolved soon and warned of the potential damage this rift could cause for the dollar. President Xi also issued a warning against returning to a Cold War mentality and China will certainly not be pushed around by the US already stating that it did not desire a trade war but are ready if necessary.

What’s coming up?

UK: There is very little data out of the UK this week with the most noticeable of data out Wednesday in the form of Industrial Production, Manufacturing Production and Construction output. We do have BoE Haldane speaking at 10:30am this morning and the market will keep an eye on any mention of interest rates next month.

EU: We have Nowotny from the ECB speaking today with the expectation of clarity around how the central bank is planning to end its QE policy this September. Any mention of bring this date forward would surely see the euro rally as there has been some speculation that this could potentially happen. Therefore, euro buyers may do well to take some risk off the table associated with their exposure.

US: The big data out of the US will be CPI on Wednesday this week. In an interview over the weekend with Fed member Evans it was noted that there is an expectation for US inflation to reach the desired 2% level. This would in turn lend itself to an interest rate rise. Traditionally, Mr. Evans is seen as somewhat of a ‘dovish’ policy maker and such bullish comments could prompt dollar bulls with investors buying the greenback heavily.

RoW

One of the main stories occupying markets this morning is the news of US sanctions being placed on Russia business. RUB has suffered due to this. Safe haven currencies are benefiting from the uncertainty linked to trade war scenarios right now. Even the US dollar was generally weaker against several currencies overnight with the largest loses against safe haven currencies like the yen and the Swiss franc (Swissie) basket of currencies. AUD made a slight recovery versus the pound and the euro but has been weaker against it close neighbor the Kiwi dollar and other safe havens like the Swissie.