In the UK, the economic calendar is bereft of any major economic releases today. Meanwhile, preliminary Purchasing Managers’ Index (PMI) data from the Euro zone suggested that private sector activity unexpectedly slowed in April. This was followed by preliminary German PMI readings which showed that activity in the manufacturing sector improved above expectations, while activity in the service sector unexpectedly weakened in April. Earlier today, data showed that French service activity grew more than expected as the sector snapped back from the contraction zone in April. However, manufacturing activity in the Euro zone’s second largest economy unexpectedly weakened in April.

Going forward, investor focus will be on the flash estimate of the US manufacturing PMI due for release later today. This data is anticipated to provide additional cues about the state of the US economy in April.

Pound Sterling – UK Markets

The Sterling traded lower against the shared currency and the US Dollar in yesterday’s trading session, following lacklustre releases in the UK. The nation’s retail sales showed a larger than expected dip in March, as shoppers cut back on food and clothes, in the latest sign that households are getting a tighter hold on their purse strings due to growing concerns about the domestic economy, ahead of the June referendum. This follows closely on the heels of Britain’s disappointing unemployment report that showed the number of jobless people rose for the first time since mid-2015 in the three months to February and wage growth slowed. Additionally, a separate report released yesterday indicated that public sector net borrowing posted a deficit in March.

The Pound trimmed part of its losses and turned positive against the shared currency this morning. In the wake of a light economic calendar today, trading in the EUR/GBP currency pair will primarily be governed by sentiment in the Euro zone and any new developments in the ongoing Brexit debate.

US Dollar – US Markets

Yesterday, robust US employment data and comments by the European Central Bank's (ECB) President, Mario Draghi, aided the greenback’s rise against the Euro. The ECB President indicated that additional stimulus measures in the Euro zone was a live possibility. Closer to home, the US Labour Department reported that new applications for unemployment benefits, a proxy for layoffs across the nation, surprisingly declined to the lowest level in 43 years during the week ended 16 April 2016, signalling continued improvement in the nation’s labour market. Additionally, a separate report by the US Federal Housing Finance Agency, showed that house prices rose in line with investor expectations on a monthly basis in February. In sharp contrast, factory activity across the mid-Atlantic sank into contraction territory in April after rebounding last month, clouding hopes that the nation’s struggling manufacturing sector has pulled back from the brink.

To end the week of US data, the flash Markit Manufacturing PMI data for April, due later today, is expected to show a slight improvement from the previous month.

Euro – European Markets

Yesterday, the Euro gained ground against its key currency peers after the European Central Bank (ECB), in its monetary policy meeting, decided to keep its key interest rates unchanged. However, the shared currency surrendered its gains after the ECB President, Mario Draghi, indicated that the central bank might cut interest rates further, if needed, to ensure that the Euro zone’s inflation rate picks up to reach its target level.

The common currency is trading in a tight range against the US Dollar this morning, following the release of a mixed set of data in the Euro area earlier today. The first print of the Euro zone’s private sector indicated that signs of a slowdown seen in the first three months of 2016 remain intact in April. The preliminary readings showed that activity in the Euro zone’s manufacturing sector unexpectedly fell, while the service sector grew less than estimated. Separately, data revealed that activity in the manufacturing sector in the largest economy of the Euro region picked up pace on the back of a rise in new export orders from China, Southern Europe and the United States. Meanwhile, German service sector growth unexpectedly weakened in April.

Other Currencies – Highlights

The US Dollar - Canadian Dollar currency pair has trimmed its previous session gains this morning as the commodity currency was supported by rising oil prices. Yesterday, the local currency had earlier weakened against its US currency counterpart amid a decline in crude oil prices and after the release of upbeat labour market data in the US, which showed that the number of persons applying for first-time unemployment benefits in the US unexpectedly fell to record an almost 43-year low reading.

The Canadian economic calendar will close the week with two major economic releases - consumer price index (CPI) and retail sales data due later in the day. Even though consumer prices in Canada are anticipated to rise at its fastest pace in March since June 2015, overall weakness in oil prices will continue to have a negative impact. Earlier in the week, Bank of Canada's Governor, Stephen Poloz, had indicated that the nation’s economy might take more than three years to adjust to the sharp slide in global oil prices.