The just out data showed that consumer prices in Britain accelerated more than estimated in March at the fastest pace since December 2014, boosted by rise in air fares, clothing and footwear due to an early Easter. The annual UK core consumer price inflation hit the highest level in March since October 2014, but continued to remain distant from the central bank’s target of 2%. Earlier today, separate data showed that the UK's retail sales growth slumped in March following the previous month’s report indicating a slowdown in retail sales growth. In the Euro area, German consumer price inflation came in line with market expectations for March, hitting its highest level since March 2015.

Across the Atlantic, investor focus will be on a speech by a key Fed official, scheduled later in the day. Investors will also eye today’s monthly budget statement along with NFIB business optimism data in the US.

Pound Sterling – UK Markets

The Pound is trading on a stronger footing against the greenback this morning after the just published data showed that Britain’s consumer prices rose more than market estimates. The annual consumer price inflation jumped to a 15-month high last month as early Easter led to an increase in air fares and clothing prices. Additionally, the annual core consumer price inflation in the UK rose more than expected in March, as it continued to remain above the 1% mark but far from the central bank’s 2% target. However, a consistent rise in consumer prices adds pressure on the Bank of England to begin squeezing its policy.

Earlier today, a report by the British Retail Consortium indicated that retail sales growth in the UK dropped in March after slowing to an almost standstill in the previous month. The report showed that the nation’s retail sales were largely hit by the timing of Easter, lower food prices and bad weather. Going forward, the UK's central bank is anticipated to keep its policy rate unchanged in its upcoming monetary policy meeting scheduled later in the week.

US Dollar – US Markets

The US Dollar traded lower against most of its major currency counterparts yesterday, hovering near its 8-month low level against the shared currency as the US Federal Reserve (Fed) continues to adopt a cautious approach towards further rate increases. In a speech, the Dallas Fed President, Robert Kaplan, stated that he wouldn’t support a rate rise in the Fed’s policy meeting scheduled later this month amid weakening economic growth prospects and instability in global financial markets. However, he indicated that an interest rate increase in the central bank’s June meeting remains a high possibility.

The greenback is trading range-bound against the major currencies this morning in the absence of major fundamental drivers. Investors will look forward to a speech by the San Francisco Fed President, John Williams, scheduled later today for further insight into the central bank’s stance over the interest rate decision ahead of this month’s monetary policy meeting. Also on focus will be the US government’s report of its receipts and outlays for February, due for publication in the session ahead.

Euro – European Markets

The shared currency is trading on a stronger footing against the US Dollar and is trading above the crucial 1.14 mark this morning. Earlier in the day, data showed that German consumer prices rose in line with market expectations for March. This final reading confirmed its preliminary reading to indicate that consumer prices rose at a faster pace compared to the previous month. February’s flat reading has coerced the European Central Bank to add further stimulus measures at its previous monetary policy meeting in March. However, the consumer prices data had limited impact on trading in the Euro, as the nation’s inflation rate continues to remain far from the European Central Bank’s medium-term target of just below 2%, largely due to falling energy prices.

Going forward, investors will eye tomorrow’s industrial production data which is anticipated to show a contraction in industrial activity across the whole Euro region, amid lackluster releases in the three largest economies of the Euro zone. Also on tab will be French and Spanish consumer prices for further direction.

Other Currencies – Highlights

This morning, the Japanese Yen declined from a 17-month high and is trading on a weaker footing against the US Dollar, after the Japanese Finance Minister, Taro Aso, cautioned against the excessive strength in the local currency. He stated that, based on a G20 agreement supporting currency stability, Japan will intervene in the currency market if “one-sided” and “speculative” moves were observed. However, market participants expect the Bank of Japan to refrain from taking any action to halt gains in the local currency, at least until this week’s G20 meeting in Washington.

Earlier today, data showed that machine tool orders in Japan dropped for an eighth consecutive month despite increased domestic demand. The direction in the US Dollar - Japanese Yen currency pair is anticipated to take cues from today’s speech by San Francisco President, John Williams, for insights into the stance of the US central bank regarding the interest rate decision.