More DATA, More POLICIES for Better RESULTS : Expect an ACTIVE SUMMER
ECB Governing Council member Francois Villeroy de Galhau said that he expects a decisive policy meeting in June and an “active summer”, which seems to nail on the interest rate increase in June and opens the door for more action.
"We will carefully monitor developments in the effective exchange rate, as a significant driver of imported inflation."
"A euro that is too weak would go against our price stability objective."
EUR/USD is still near multi-year lows around 1.0430
This is not the first time we have seen comments like this, which should boost the Euro – but the market refuses to rally despite the direct messaging. GBP/EUR higher than last week, trading 1.1730
GBP/USD: It is hard to find a positive spin on GBP/USD – this morning alone we have ING suggesting a slide to 1.2000 remains a distinct possibility & BBH saying that if the rate breaks through the May20 low of 1.2075, we could slide all the way to 1.1410.
Currently trading around 1.2250, but as we can see below, there is plenty of UK data this week.
This morning we have the Bank of England’s Monetary Policy Hearing in Parliament which is bound to throw out some interesting statements, but the harm was done at the last BoE meeting when they revised DOWNWARDS all UK growth forecasts.
News from China is worth noting – there is nothing positive, and this will weigh on market sentiment as well as pressuring supply chains and (already strained) pricing (ref. Eren Sengezer):
The data from China showed earlier in the day that Retail Sales contracted by 11.1% on a yearly basis in April, missing the market expectation for a decline of 6% by a wide margin. Additionally, Industrial Production narrowed by 2.9% in the same period, compared to analysts' forecast for a growth of 0.7%. Meanwhile, the city of Shanghai announced that coronavirus controls will remain in place due to the high risk of a rebound in infections despite the fact that five out of the city's 16 districts have reported no cases. Moreover, the city of Beijing decided to extend the work-from-home orders in four districts, including Chaoyang.
Key moments this week:
Monday: UK Monetary Policy Hearing / EU Growth Forecasts
Tuesday: UK employment data / EU GDP data / US Retail Sales / evening speech from US Central Bank / evening speech from ECB
Wednesday: UK Inflation data / Canada Inflation
Thursday: Australia Employment data
Friday: UK Retail sales data
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The RedFX Team