In a slow start to economic releases this week, it will be interesting to see whether the US Dollar faces further downside pressure against its key peers today. The minutes of the FOMC monetary policy meeting, published last week, has not helped to ease the uncertainty surrounding the probable timing of an interest rate rise in the US.

In the upcoming days, traders will eye September retail sales and CPI data in the US that could shed some more light on the state of the US economy and provide additional guidance on the US Fed’s next move. In the UK, CPI data due tomorrow could confirm BoE’s concerns about the nation’s inflation outlook that were expressed in the minutes of its October policy meeting. This week, markets will also refocus its attention on weaker inflationary pressures in the Euro zone.

Pound Sterling – UK Markets

The Pound has edged higher against the US Dollar this morning, amid the absence of notable macroeconomic indicators in either of the economies. Tomorrow, direction in Sterling will be mostly influenced by UK CPI data, especially after last week’s BoE minutes highlighted that the MPC was cautious about the outlook for inflation. Mid-week, a raft of UK employment data will draw significant market interest. Any indications that the domestic economy continues to head on to a path of stronger recovery could spark a rally in Sterling – US Dollar currency pair this week.

Reversing most of its gains, the Pound ended on a weaker note against the greenback on Friday. Sterling closed higher against the US Dollar for the week even as several data releases in the UK fuelled doubts about the strength of recovery in the UK economy. However, disappointing September services PMI, publication of dovish BoE policy meeting minutes and a larger than forecasted national trade deficit last week added to the downward pressure on the Pound against most of its other key peers.

US Dollar – US Markets

The US Dollar continues to trade on a softer side against most of its major currency counterparts this morning. After the US Federal Reserve released the minutes of September monetary policy meeting last week, investors have been treading cautiously as expectations of an imminent rise in interest rates have diminished. The minutes confirmed that global factors weighed on the policymakers decision to keep interest rates on hold in the previous month. Adding to that, disappointing employment reports in August and September have favoured the monetary doves.

Two voting members of the Fed's policy committee on Friday delivered cautionary messages, emphasising that US economic data will determine whether and when to endorse a rate increase. This week, investors will eye a lot of economic data which could offer compelling evidence as to whether a Fed rate rise remains likely by the end of this year. These include retail sales, consumer price inflation data and Michigan University’s consumer confidence report.

Euro – European Markets

The common currency has nudged lower against the Pound this morning. However, momentum in the Euro – US Dollar remains intact today, as the greenback remains broadly pressured on the back of the dovish Fed monetary policy meeting minutes released last week. The European economic calendar is quite thin today, with hardly any significant data to trigger volatility in the Euro against its key peers. Moving ahead, Euro investors will look forward to key data releases this week to gauge the currency area’s recovery in the third quarter of this year. Euro zone’s largest economy has just stepped out of a bad week, which saw a sharp slide in August exports, and a larger than expected decline in factory orders and industrial production. Amid these growing concerns, market participants are likely to focus on the ZEW measure of investor sentiment for the German economy that is slated to be reported tomorrow.

Over the next few days, CPI data in the Euro zone and its various economies could help the market in taking a call on the ECB’s forthcoming moves with regards to further policy easing measures.

Other Currencies – Highlights

Earlier today, the New Zealand Dollar – US Dollar currency pair was seen swiftly moving towards the 0.68 mark, as the greenback continued to be under pressure after last week’s minutes of the Fed’s September policy meeting reinforced expectations that the benchmark interest rate in the US could remain unchanged until well into 2016.

In economic news, the Real Estate Institute of New Zealand earlier today reported that domestic house prices and sales volumes both surged higher for September. Data also revealed that strength in the Auckland housing market continued to spill over into adjoining regions, with Northland, Waikato and the Bay of Plenty all recording their highest prices ever in September. The house prices figures confirm that tighter lending rules and new tax rules for overseas buyers had little effect on New Zealand’s residential market. Going forward, a speech by the RBNZ Governor, a report on business conditions in New Zealand and CPI data for the third quarter, scheduled this week, will attract significant market attention.