The minutes of the European Central Bank’s (ECB) April policy meeting indicated that concerns over inflation in the Euro region rose. Earlier today, data showed that the Euro zone’s seasonally adjusted current account surplus widened in March. Also, growth for German producer prices came in line with estimates for April, slightly rising from the previous month.

In the session ahead, an update of the UK’s CBI Industrial Trends Survey will be eyed by investors. Meanwhile, the fast approaching June Brexit referendum continues to weigh on the Pound. Elsewhere, investor focus will be on existing home sales data along with a speech by a key US Federal Reserve (Fed) official scheduled later today.

Pound Sterling – UK Markets

The Pound has reversed its previous session gains and is trading lower against the greenback and the Euro this morning. Next on investors radar is the Confederation of British Industry’s (CBI) industrial trends report, scheduled for release in some time, which is expected to dip further in May. Looking ahead, the next week looks pretty busy for Britain with a choc-a-block economic calendar. Market participants will look forward to the nation’s preliminary reading of first quarter GDP, along with public sector net borrowing, Nationwide house prices, and consumer confidence index data, all lined up for release next week.

Yesterday, the Pound – US Dollar currency pair briefly surged past the crucial 1.46 handle and ended higher for the fourth day in a row, buoyed by a solid rebound in British retail sales. Data indicated that retail sales in the UK posted a stronger than expected growth in April, as consumers shrugged off Brexit jitters. Both food as well as non-food sales posted an increase during the period. Excluding auto fuel, retail sales sat comfortably above the consensus forecast.

US Dollar – US Markets

The US Dollar extended its winning streak against the Euro for the third consecutive session yesterday, despite a downbeat manufacturing report, as renewed expectations for a June interest rate increase by the US Fed lent support to the greenback. Data showed that factory activity in the US mid-Atlantic region contracted further in May. Nevertheless, supportive comments from the New York Fed President, William Dudley, breathed new life into the greenback. He indicated that it could be appropriate to raise interest rates in June or July if US GDP growth picks up. In other economic news, the number of Americans seeking unemployment aid fell from a 14-month high last week, the latest sign that the economy was gaining strength after a dejected first quarter. Moreover, the Chicago Fed national activity index rebounded in April.

Moving ahead, investors will look forward to the US existing home sales data for April, along with a speech by the Fed Governor, Daniel Tarullo, later today.

Euro – European Markets

The shared currency is trading higher against its major peers this morning. Data released earlier during the day showed that German factory gate prices declined for the 33rd consecutive month in April, as energy prices continued to exert downward pressure and providing the latest setback to the ECB quest to beat low inflation in the Euro zone. On a monthly basis, the producer price index (PPI) advanced less than expected. Separately, data showed that the Euro zone’s current account surplus widened in March.

Yesterday, the Euro extended its slide against the greenback for the third consecutive session, as the ECB’s April meeting minutes failed to surprise investors and indicated that risks to the region’s inflation and growth outlook remain tilted to the downside. The central bank’s governing council also reiterated that they remain strongly committed to reviving inflation to the 2.0% target. On the data front, Euro zone construction output slid for the second consecutive month in March, as both building and civil engineering output declined.

Other Currencies – Highlights

The Canadian Dollar is trading higher against the greenback this morning, ahead of Canada’s retail sales and consumer price index (CPI) data, scheduled for release later today. Expectations are for retail sales to post a decline in March while consumer prices are projected to increase in April. Core CPI for April, which excludes the most volatile items, is expected to post a small gain, whereas core retail sales are likely to witness a downturn in March.

Earlier during the session, the Canadian Dollar weakened to a one-month low level against its US counterpart, falling for the third consecutive session amid a drop in oil prices and over increasing anticipation that the US Fed could increase rates as soon as next month. The economic data released also failed to provide the much-needed support to the Canadian Dollar. Canada’s wholesale sales declined more than expected in March, falling for the second-straight month, mainly led by low sales in the motor vehicles and food category.