In the UK, a report by the British Retail Consortium (BRC) published earlier in the day revealed a surprise drop in the nation’s retail sales for April. In separate data, the trade deficit in the UK narrowed more than estimated in March. In the Euro zone, the German trade surplus widened above market estimates in March as the nation’s imports dropped and exports surged. Meanwhile, industrial production in Europe’s largest economy fell more than estimated for March. Data also showed that industrial production in the second and third largest economies of the Euro region slipped in March.

Later in the session, investor focus will be on a couple of releases in the US in the form of NFIB business optimism index and JOLTS job openings.

Pound Sterling – UK Markets

The Pound continues to trade higher against the US Dollar and the shared currency this morning after the just published data showed that the nation’s trade deficit narrowed more than anticipated in March, largely due to the nation’s increased exports during the same period. Meanwhile, concerns over the soon approaching Brexit referendum, which is scheduled for the next month, continues to weigh on the local currency as polls continue to paint a mixed picture of the nation’s individuals favouring an exit from the European Union versus the ones opposing. Going forward, investors look forward to this week’s interest rate decision by the Bank of England which might provide a sharp direction to the Pound against its key peers.

Earlier in the day, a report by the BRC indicated that UK retail sales unexpectedly dropped in April, registering its sharpest decline in eight months. The weak sales performance was due to cautious buying by individuals and as the unlikely cold weather had an impact on the sales of summer clothing.

US Dollar – US Markets

The greenback extended its winning streak against the Euro and the Pound yesterday for the sixth consecutive session. Data released yesterday showed that the US labour market conditions index registered its third straight decline in April, thus giving the US Federal Reserve (Fed) some additional ammunition to further delay an interest rate increase on the grounds that there is still a significant slack in the nation’s labour market. This follows closely on the heels of last week’s nonfarm payrolls and the ADP employment change data, both of which came in weaker than expected for April. Separately, the President of the Chicago Fed, Charles Evans, gave a thumbs up to the Fed’s ‘wait and see’ monetary policy approach and stated that an improvement in US labour prospects is fundamental to the economy’s growth.

Looking ahead, the US NFIB small business optimism index for April, due later today, is expected to post a mild rebound. Moreover, the JOLTS job openings data will also generate a significant amount of market attention, as the recent disappointing employment numbers will continue to weigh on investor sentiment.

Euro – European Markets

The shared currency is trading higher against the US Dollar this morning, buoyed by a positive German trade balance data and as the greenback retreated across the board. Germany’s trade surplus surged in March to reach its highest record since August 1990, as exports rose and imports fell more than anticipated. On the other hand, industrial production in Germany declined for the second consecutive month at the fastest pace since August 2014, further corroborating the fact that industrial output has become a problem for the nation’s economy. Further, pulling out a double-whammy for the Euro zone, French industrial production surprisingly declined in March, led by a weaker output in manufacturing, transportation and food. Moving ahead, market participants will have their eyes set on the Euro zone and Germany’s first quarter gross domestic product data, scheduled for release later this week.

Yesterday, there were a couple of positive news in the Euro zone economy, as German factory orders and the Euro zone’s sentix investor confidence index came in better than expected.

Other Currencies – Highlights

The Japanese Yen tumbled to a two-week low level against the US Dollar in the previous session, after Japan’s Finance Minister, Taro Aso, once again pitched his battle towards the strong domestic currency and reiterated his resolve to intervene in the currency market if needed, in Japan’s quest to find a way out of a cycle of low growth and low inflation. On the data front, labour cash earnings in Japan advanced for the second consecutive month in March. Additionally, the nation’s consumer confidence index weakened less than anticipated in April. Among individual components of the indicator, the overall livelihood index and the employment sub-index declined, while the indicator for income growth improved slightly.

The US Dollar- Japanese Yen currency pair is slowly climbing towards the crucial 109.0 mark this morning. Looking ahead, with no significant economic releases in Japan today, the US JOLTS jobs openings and NFIB small business optimism index, due later in the day, will be eyed for further direction.