This week kick starts on a lighter note. The UK and Eurozone economic calendars are sporting an empty look today. In the US, a pair of second tier economic data points are scheduled for release later in the day - the NAHB housing market index and the NY empire state manufacturing index, both for the month of August.

This week, main global risk events are the US and the Eurozone consumer price index (CPI), in addition to the release of the US Federal Reserve (Fed) and the European Central Bank’s (ECB) latest monetary policy meeting minutes. Britain’s unemployment rate, CPI and retail sales data will also attract attention.

Pound Sterling – UK Markets

The Pound has reversed its previous session losses and is trading higher against its major peers this morning. Earlier in the session, data showed that UK’s Rightmove house price index dropped further in August. Looking ahead, market participants await Britain’s unemployment rate, consumer price index, retail sales and public sector net borrowing data, all due this week, for further indications on the impact of the Brexit vote on the UK economy.

On Friday, Sterling hit a one-month low against the US Dollar and a three-year trough against the shared currency, based on expectations that poor economic data will lead the Bank of England to ease monetary policy again in the coming months to cushion the economy from a downturn. Prior to this, the Pound had surged ahead of the crucial 1.30 mark against the greenback amid a broad-based weakness in the US Dollar, after the release of weaker than expected US retail sales and producer price index data that prompted investors to roll back expectations of a near-term interest rate increase by the US Fed.

US Dollar – US Markets

The greenback is trading lower against the single currency and the Pound this morning, after last week’s data showed that US retail sales remained unexpectedly flat in July, a sign that consumers were cautious after three months of solid gains. Additionally, cooling consumer spending and tame inflation suggests that the Fed will probably not raise interest rates anytime soon despite a robust labour market. Other economic data indicated that consumer confidence in the US fell short of consensus estimates in August. At the same time, concerns about the outcome of the nation’s presidential election continued to act as a source of uncertainty about growth prospects among consumers. Separately, US producer prices unexpectedly resumed their decline in July, marking the biggest drop since September, dragged down by a fall in clothing, energy and food prices. The downbeat producer prices data points to a meagre inflation environment that could make it difficult for the Fed to raise interest rates in the near term.

Going forward, investors will look at the NAHB’s housing market data, scheduled later today.

Euro – European Markets

The shared currency is trading mixed against the US Dollar and the Pound this morning. The Eurozone economic calendar is devoid of any data points today, however things will heat up on the economic release front as this week progresses. Market participants eagerly await a slew of crucial economic data releases this week, including the Eurozone’s trade balance, consumer price index and the ZEW economic sentiment index, along with the ECB’s latest monetary policy meeting minutes which could shed some light on the internal discussions within the central bank’s governing council.

On Friday, the Euro rallied against the greenback after disappointing US retail sales data threw cold water on hopes of a near term Fed interest rate increase. On the domestic data front, Eurozone’s GDP halved in the second quarter, as a better than anticipated expansion in Germany was balanced by a surprise stagnation in Italy. On the other hand, the region’s industrial production rebounded above expectations in June, buoyed by a surge in the production of capital goods and durable consumer goods.

Other Currencies – Highlights

The Japanese Yen is trading higher against the greenback this morning, after the final reading of Japan’s industrial production registered an advance in June. Moreover, the nation’s capacity utilisation rebounded during the same month.

Earlier in the session, data showed that Japan’s economy barely grew during the April-June quarter of this year, as weaker exports and business investment weighed on the nation’s faltering recovery bid. Meanwhile, on an annualised basis, Japan logged a slight growth, but it fell short of investor expectations. The nation’s weak second quarter growth has increased pressure on the Bank of Japan to provide additional stimulus to the ailing economy. The world’s third largest economy has been stuck in low growth for the most part of two years, as weak domestic and international demand have undermined the government’s ambitious efforts to boost growth and reinvigorate the economy. Moving ahead on the economic release front, market participants look forward to Japan’s merchandise trade balance and the all industry activity index, due later this week.