The just out economic data showed that the UK’s construction sector experienced modest activity on an annual basis in April, with the reading surpassing market expectations. Next week, economic releases from the nation will pick up pace, with key data including consumer price inflation, retail sales and BoE meeting minutes on the agenda.

In the Euro zone, the economic calendar is a bit light, with investors focusing largely on news from Greece. Across the Atlantic, currency traders today will keep a tab on producer prices data and Reuters/Michigan consumer sentiment survey result. Meanwhile, the spotlight will shift towards next week’s FOMC meeting, with recent upbeat releases favouring an interest rise sooner than expected.

Pound Sterling – UK Markets

The Pound traded higher against the Euro in yesterday’s trading session after the latest RICS survey showed that house prices in the UK are anticipated to move higher over the next three months, as there is an acute shortage of properties in the nation’s residential market. The Pound - US Dollar currency pair was also broadly higher yesterday.

The Pound has edged higher against the single currency this morning. In economic data, the just released construction output data showed that activity in the sector slowed on an annual basis in April, albeit less than market estimation. Following the release of the data, Sterling has nudged lower against the US Dollar. With no further domestic releases to influence trading in Sterling today, investors look forward to next week’s set of key economic data including UK’s consumer price inflation, data from the labour market, BoE minutes and retail sales.

US Dollar – US Markets

The US Dollar is trading broadly higher against its key peers this morning. Following the key retail sales release yesterday, investors now look forward to a string of releases including producer prices and the Reuters/Michigan consumer sentiment index, both of which provide a reflection of larger economic trends. Markets anticipate that the recent stabilization in energy prices will likely lift prices of goods and services out of deflationary territory for May. Also, expectations are for the flash consumer sentiment in June to remain at elevated levels, a sign of confirmation of a strengthening US economy following encouraging gains in payroll numbers last week.

The greenback was supported yesterday by a rebound in retail sales growth in the US for May, a sign that consumers stepped up spending in spring after a cautious start to the year. Meanwhile, the number of claims for first time unemployment benefits rose slightly last week, but remained at a level that was consistent with a strengthening labour market.

Euro – European Markets

The Euro lost ground against its major currency counterparts yesterday, as Greek debt talks for a cash for reform deal once again got disrupted after IMF officials abruptly broke off discussions, citing major disagreements with Athens. The unexpected move by the IMF has stirred fears that the cash strapped nation may be forced to default on its debt at the end of this month.

The Euro – US Dollar currency pair continued to slide for the second consecutive trading session this morning and market participants will again be closely monitoring any new developments from Greece. In economic news, data released earlier in the day showed that consumer prices in Spain declined in line with market expectations for May, while wholesale prices in Germany ticked higher during the period. Later in the day, industrial production reading from the Euro zone will attract investors’ attention, with markets anticipating a slight pickup in activity for April.

Other Currencies – Highlights

The upbeat industrial production reading that came out earlier this morning in Japan failed to lift the domestic currency and the Japanese Yen continues to trade on a weaker footing against the US Dollar. The final print of Japan’s industrial sector showed that production figures for April were a notch higher than the earlier estimate, and the nation moved out from a two month period of contraction. Meanwhile, an index measuring tertiary industry in Japan fell unexpectedly for April, marking its first major decline in almost a year, as wholesale and retail trade, scientific research, professional and technical services, transport and postal activities logged a decline in activity during the month.

Going forward, monetary policy statements from the US and Japan next week will attract a lot of market attention. While the Fed is expected to tighten its policy later this year, the BoJ seems inclined to maintain its easy stance.