Data published earlier today indicated that the German unemployment rate fell to its lowest level in May. Additionally, the number of persons unemployed in Germany fell more than estimated for the same month. Earlier, data showed that German retail sales surprisingly continued to drop in April, against expectations for an increase. Separately, core inflation excluding tobacco picked up pace above market estimates in the second largest economy of the Euro zone for May. Later in the session, the release of the Euro zone’s core consumer price index and unemployment report will be eyed by market participants for further clues.

Across the Atlantic, investor focus will be on personal income and spending data along with the nation’s consumer confidence index and the Chicago Purchasing Managers’ Index scheduled for release later in the day.

Pound Sterling – UK Markets

The Pound is trading lower against the shared currency and the US Dollar this morning, breaching the crucial 1.46 handle against the latter. Meanwhile, the latest poll related to the European Union referendum indicated that the “Remain” vote is leading the survey. Overnight data showed that Lloyds Bank’s latest barometer of business mood in the UK dipped to a 3-year low level in May. Further, overall business confidence and hiring plans were also subdued during the month. The British Retail Consortium’s (BRC) shop price index for May is scheduled for release overnight. The index is expected to post another decline this month, following a drop in the past two releases. Moving ahead, investors will come across various economic announcements in Britain this week.

On Friday, the Pound substantially declined against the US Dollar as the greenback strengthened across the board. The strength in the US Dollar was supported by remarks from the Federal Reserve (Fed) Chairwoman, Janet Yellen, wherein she indicated that an interest rate increase looks viable within the coming months.

US Dollar – US Markets

The greenback is trading higher against the shared currency this morning. Looking ahead, there is a slew of economic releases in the US today. Investors will be looking out for trading cues from data on US personal income and consumer confidence, due later in the day. In addition to this, the S&P/Case-Shiller Home Price Index, along with the Chicago purchasing managers’ and the Dallas Fed manufacturing indices data, will also attract a significant amount of market attention.

On Friday, the US Dollar gained ground against its peers after comments by the US Fed Chairwoman, Janet Yellen, increased the likelihood of a near-term interest rate increase. The Fed Chief indicated that a rate increase “would be appropriate” in the coming months if the US economy picks up as expected and jobs continue to be generated. On the data front, the US first-quarter growth was not as weak as initially expected, mainly driven by better figures from inventories and the housing sector. The final estimate for the nation’s growth barometer will be released in the last week of June.

Euro – European Markets

The Euro is trading mixed against the US Dollar and the Pound this morning. Data showed that Germany’s unemployment rate unexpectedly declined to a historic low level of 6.1% in May. Data released earlier in the session showed that German retail sales surprisingly declined in April, its second consecutive fall, casting doubts over expectations that consumer spending will propel growth in the Euro zone’s largest economy as foreign trade weakens. Additionally, French producer prices dropped in April, driven mainly by a decline in prices of electricity and food products. Going ahead, investors await the release of the Euro zone’s consumer price index (CPI) due in some time.

Yesterday, data showed that Germany’s CPI rose in line with investor expectations in May. Separately, businesses and consumers across the Euro zone became more optimistic about their prospects in May, reinforcing the belief that the European Central Bank will sit tight at its June policy meeting. The region’s economic confidence and business climate indicator rose to a four-month high level in May.

Other Currencies – Highlights

The Japanese Yen has trimmed its losses against the US Dollar and is currently trading higher against its US currency counterpart. On the data front, Japan’s small business sentiment deteriorated more than anticipated in May. In contrast, the nation’s housing starts advanced above expectations at the fastest pace in ten months in April. Further, data released earlier in the session showed that Japan’s unemployment rate held steady in April, in line with market expectations, indicating that employment is one of the lone bright spots in an otherwise moribund economy. In more good news, the nation’s industrial production defied investor expectations and advanced for the second straight month in April.

Over the weekend, Japan’s retail trade dropped for the second consecutive month in April and for the fifth time in the past six months, mainly due to falling fuel prices and lower sales of household electronics, thus lending further traction to Prime Minister, Shinzo Abe’s plans to delay sales tax increase by around two years. The Japanese government had promised to raise taxes in order to address its massive debt.