At 4:30 AM May MPC Vote (exp 8-1, prev 2-7)
At 5:00 AM Eurozone March Industrial Orders m/m (exp 1.1%, prev –0.7%)
Eurozone March Industrial Orders y/y (exp 6.9%, prev 4.7%)
At 8:30 AM Canada April Leading (exp 0.4%, prev 0.4%)
The major currency pairs are little changed with the greenback holding onto its gains against the majors, buoyed near 121.60 versus the yen and 1.3450 against the euro. The meeting between US Treasury Secretary Paulson and Chinese officials was essentially a non-event in the foreign exchange market. Paulson urged China to hasten its currency reform, only to be rebuffed from China’s Vice Premier Yi, who said that pressure from the US would be counterproductive and merely complicate matters.
The FX market continues to consolidate amid a dearth of key news or data at the start of the week. The calendar picks up in the coming session with the release of the Bank of England’s MPC meeting minutes from May, in which the Bank hiked rates by 25-bp. Traders will scrutinize the minutes for clues on whether additional tightening can be expected from the BoE, particularly following its previous statement in which it downplayed further risks to inflation. The Bank had previously stated that it expects CPI to trend back toward its 2% target over the course of this year, tempering market expectations for aggressive tightening in the coming months. Meanwhile, a 25-basis point ECB rate hike in June is already fully priced-in and we anticipate another 25-basis point hike in Q4, lifting the ECB’s benchmark lending rate to 4.25% by year-end.
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