Fresh record high for Euro-zone inflation.
The headline Euro-zone CP inflation rate increased to 8.1% for May from 7.5% for April which was above consensus forecasts of 7.8% and another record high for the series. The underlying rate also increased to 3.8% from 3.5% and above expectations of 3.6%. The data-maintained pressure for ECB policy tightening.
US consumer confidence declined to 106.4 for May from a revised 108.6 previously, although this was above market expectations. There was a decline in the current conditions and expectations components for the month with slightly less confidence in the labour market.
US bond yields moved higher with the 10-year yield around 2.87%. Higher yields underpinned the US dollar and triggered reservations surrounding equity markets.
Oil prices retreated from 2-month highs on Tuesday following reports that OPEC could exclude Russia from overall production targets which would potentially increase scope for higher OPEC output. OPEC rhetoric will continue to be watched closely in the short term.
Swiss National Bank member Zurbruegg stated that the high nominal value of the franc has dampened inflation and added that Swiss inflation in Switzerland is low relative to other countries, but not irrelevant. He added that there had not yet been evidence of higher wages, but the central bank would need to monitor the situation closely.
The Bank of Canada will announce its latest policy decision on Wednesday with strong expectations of a further 50 basis-point hike to 1.50%. The statement will be important, but there is no updated Monetary Policy Report at this meeting.
Higher than expected Euro-zone inflation triggered limited Euro losses on growth concerns. ECB rhetoric maintained strong expectations of a July rate hike, but this is priced in. The dollar gained net support into the month-end fix before losing some ground again.
EUR/USD dipped to 1.1680 before recovering to 1.1730 and settling around 1.0710 on Wednesday. US bond yields moved higher on the day which underpinned the US currency and the dollar index recovered further from 5-week lows. USD/JPY posted net gains to 129.25.
Hawkish SNB rhetoric again underpinned the Swiss franc. EUR/CHF dipped back below 1.0300. USD/CHF settled above 0.9600 amid wider dollar gains.
Sterling moves were tended to be dominate by risk conditions with a lack of domestic confidence. GBP/USD traded below 1.2600 on Wednesday. GBP/EUR consolidated just above the 1.1750 level.
Commodity currencies lost ground as equities came under pressure. Australian first-quarter GDP increased 0.8%, above consensus forecasts of 0.6%. AUD/USD still retreated to 0.7170 amid the firmer US dollar. The Canadian dollar held gains into Wednesday’s BoC policy decision with USD/CAD
|07:00||EUR German Retail Sales (Y/Y)(APR)||-2.70%|
|07:00||EUR German Retail Sales (M/M)(APR)||-0.10%|
|07:00||GBP Nationwide House Prices (Y/Y)(MAY)||12.10%|
|07:00||GBP Nationwide House Prices (M/M)(MAY)||0.60%||0.30%|
|08:30||CHF SVME PMI(MAY)||62.5|
|08:45||Italy - Markit/ADACI Mfg PMI(MAY)||54.5|
|08:50||France - Markit Mfg PMI(MAY)||55.7|
|08:55||EUR German Manufacturing PMI (M/M)(MAY)||54.1||54.7|
|09:00||Euro-Zone PMI Manufacturing(MAY)||55.3||54.4|
|09:30||GBP PMI Manufacturing(MAY 01)||54.6|
|10:00||Euro-Zone Unemployment Rate(APR)||6.70%||6.80%|
|13:15||USD ADP Employment Change(MAY)||247K|
|14:30||CAD RBC Manufacturing PMI(MAY)||56.2|
|14:45||USD Manufacturing PMI(MAY)||59.7|
|15:00||US Manufacturing ISM(M/M)(MAY)||55.3||55.4|
|15:00||USD JOLTs Job Openings(APR)||11.000M||11.549M|
|15:00||CAD BoC Interest Rate Decision||1.00%||1.00%|
|19:00||USD Federal Reserve's Beige Book|