Earlier today, a survey by the GfK indicated that consumer sentiment in Germany improved slightly above estimates for June. Separate surveys by the Ifo indicated that business sentiment in the largest economy of the Euro zone improved more than estimated in May while current conditions and business expectations for the next six months also improved above estimates for the same month. Additionally, data indicated that industrial sales dropped in March. The UK economic calendar is bereft of any major macroeconomic releases today.

Across the Atlantic, investor focus will be on the flash services PMI data scheduled for release later in the session. Also on tab will be MBA mortgage applications data along with the house price index data in the US later today. A speech by Patrick Harker, a key US Federal Reserve (Fed) official, will be closely eyed.

Pound Sterling – UK Markets

The Pound managed to tread higher against its major peers during yesterday’s session despite data showing that Britain’s government borrowed more than expected in April. Sterling gained support after the latest European Union (EU) referendum related poll showed a substantial lead for the “Remain” campaign. Later in the session, the Pound’s upside momentum gathered further steam following the Bank of England (BoE) Governor’s encouraging words about inflation. At the UK Parliament’s Treasury Committee meeting, the BoE Governor, Mark Carney, defended his decision to foray into the Brexit debate and calmed jittery nerves by assuring to bring the UK’s inflation back to target, irrespective of the referendum’s outcome. In other economic news, Britain’s retail sales volume rebounded this month after a sharp fall in April.

With no economic releases in the UK today, market participants will look forward to the nation’s first quarter GDP growth data, scheduled for release tomorrow. Expectations are for the nation’s growth to remain steady at both the quarterly and the annual level.

US Dollar – US Markets

The greenback reached a ten-week high level against the Euro yesterday after robust US new home sales data buoyed expectations that the US central bank might raise interest rates sooner than expected. Data showed that new single-family home sales for April skyrocketed to their largest monthly gain in more than two decades, blowing past expectations and bolstering optimism over the health of the nation’s housing market. US housing reports continue to post impressive figures mainly led by steady job gains and low mortgage rates. Last week, US existing home sales rose above expectations and clocked in its second consecutive monthly gain in April, signalling growing confidence in the nation’s economic prospects. However, the news was not that pleasant on the manufacturing front, as the Richmond Fed manufacturing index surprisingly declined in May, moving in tandem with last week’s Philadelphia Fed and the NY Empire State manufacturing indices data.

Going ahead, investors await some key data releases from the US today, including the Markit services PMI, house price index, and advance goods trade balance data, due later today.

Euro – European Markets

The shared currency is trading mixed against the US Dollar and the Pound this morning. Data released earlier during the session showed that Germany’s forward-looking consumer confidence index advanced to a nine-month high in June, indicating that the economy is expected to grow over the coming months. In a separate report, the German research institute, Ifo, recorded an improvement in all of its three indicators, namely business climate, currency conditions, as well as the expectations index.

Yesterday, the Euro declined to a fresh one-month low level against the US Dollar, after the Euro zone and German ZEW surveys reflected weakening economic sentiment. Further, the greenback gained support following the release of upbeat US new home sales data which raised the likelihood of an interest rate increase by the Fed in the near-term. The Euro zone ZEW economic sentiment index declined in May. Meanwhile in Germany, the ZEW economic sentiment index posted a surprise fall while the current situation index reflected higher optimism over the nation’s present environment.

Other Currencies – Highlights

The Canadian Dollar has extended its previous session gains against the greenback this morning, deriving support from the recovery in crude oil prices. Looking ahead, the Bank of Canada (BoC) is scheduled to announce its monetary policy decision later in the session. While the central bank is widely expected to keep its benchmark interest rate steady, the accompanying statement will be closely watched to decipher its future moves. The central bank seemed quite upbeat about the Canadian economy at its previous meeting wherein the BoC left its key interest rate unchanged while upgrading its 2016 GDP forecasts. However, it might be difficult to remain optimistic this time, given the Alberta wildfires that disrupted the nation’s oil production and hence, the BoC is expected to strike a more dovish tone at this meeting.

Moving ahead, trading in the US Dollar – Canadian Dollar currency pair will be governed by economic releases from the US, namely, Markit services PMI, advance goods trade balance, and house price index data, along with speeches by three top US Fed officials.