Over the weekend, the Rightmove survey indicated that while prices dropped for May, activity in the UK housing market is likely to pick up again after the recent election result. Looking ahead, the publication of the UK’s consumer price index tomorrow will attract attention and could possibly have a negative impact on the Pound if data indicates that the British economy entered into deflation.

Across the Atlantic, the NAHB housing market index, due later today, will lead the start to this week’s housing market related economic indicators. In the Euro zone, Greece continues to make news as negotiations between the debt laden nation and its creditors drags on.

Pound Sterling – UK Markets

The Pound has lost ground against the greenback this morning. The Pound-US Dollar currency pair is likely to trade under pressure should the broad macroeconomic indicators coming out of the UK economy this week disappoint. Market participants will keep a tab on the consumer price and producer price data, scheduled for release tomorrow. While higher than expected inflation in the UK is likely to trigger a Sterling rally, any disinflationary trends will probably drive the Pound lower. Inflation has remained at the zero level since February and official figures tomorrow are likely to show whether low air fares, cheaper water bills and ongoing supermarket price wars have caused prices to fall in April compared to a year ago.

A survey by Rightmove over the weekend revealed that asking prices for homes in the UK slipped for May, as concerns about potential property tax before the election eased demand for expensive homes. Data also indicated that prices are likely to pick up again post election as political uncertainty seems to have faded.

US Dollar – US Markets

The US Dollar is trading higher against its key peers this morning. Earlier today, the Chicago Fed President Charles Evans stated that the Fed should avoid raising rates this year. However, he remained upbeat about the outlook for growth and hiring. Moving ahead, investors will eye the FOMC minutes of the latest meeting, set for release mid-week, for clarity on the future course of interest rates in the US. Meanwhile, today’s housing market index, followed by housing starts tomorrow and existing home sales later this week, will provide fresh updates on trends in the US real estate market.

The US Dollar traded weaker against the majors on Friday. The preliminary May reading of the Reuters/Michigan consumer sentiment index dropped unexpectedly as optimism for future outlook seems to have deteriorated following a sluggish first quarter. The downbeat survey comes days after the US retail sales report indicated little change in consumer spending for April. Separately, industrial production in the US continued to decline for April, as manufacturers reel under the impact of a stronger US Dollar and the slowdown in oil and gas production.

Euro – European Markets

The shared currency has given up part of its earlier gains and is trading on a weaker footing against the US Dollar this morning. Over the weekend, German officials maintained pressure on the Greek government, with the German Economy Minister, Sigmar Gabriel urging the cash strapped nation to implement reforms before discussing a third aid package for further funding. Moreover, a leaked IMF memo suggested that Greece has no chance of fulfilling its debt obligations unless an agreement is reached. The European calendar looks fairly light at the start of the week. Data released earlier in the day showed that Italy’s global trade surplus widened for March, as a weaker currency boosted demand for the nation’s exports. Going forward, the direction of the Euro-US Dollar currency pair will depend on the German ZEW economic sentiment gauge and the final Euro zone inflation and trade data numbers, scheduled tomorrow.

The Euro moved above the 1.14 mark against the US Dollar on Friday, following a soft batch of US economic releases.

Other Currencies – Highlights

Data released earlier in the day showed that retail sales in Switzerland continued to decline for March, casting a dark shadow on the outlook for private consumption and the pace of economic growth in the nation. The central bank’s January decision to abandon its ceiling on the Swiss Franc against the Euro has caused Switzerland’s consumer prices to fall, as the stronger Swiss Franc has kept the cost of imports down and made exports less attractive. Following the release of the data, the USD/CHF currency pair has remained largely unchanged, with the Swiss Franc continuing to trade on a weaker footing against the US Dollar.

In line with today’s retail sales data, data released on Friday indicated that Switzerland’s producer and import prices for April dropped, reversing a rise witnessed in March. Going forward, market participants will keep a close watch on Switzerland’s ZEW survey expectations for May, scheduled on Wednesday, to gauge the outlook for the nation’s economy.