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May pinning hopes on the DUP to unlock parliament stalemate

US DOLLAR

The Dollar Index surrendered the 97 handle last week, weighed by a flurry of weaker-than-expected data releases including CPI, PPI and industrial production. This may factor into this Wednesday’s FOMC policy decision although most economists expect a wait-and-see stance after they dropped language in January that signalled further hikes were necessary.

On the data front, factory orders are out tomorrow followed by Philly Fed on Thursday and Markit PMI on Friday.

STERLING

The pound remains attentive to Brexit related developments having touched a nine-month high versus the US Dollar at 1.3385 on Wednesday as lawmakers voted against a no-deal Brexit. UK Prime Minister Theresa May still looks to be struggling to secure the votes needed to pass her deal in the third meaningful vote tomorrow and this has weighed on Sterling today.

Looking ahead, Brexit related headlines will likely remain the key driver for the pound although there are some key data releases to note plus the Bank of England on Thursday – labour market indicators are due tomorrow, inflation on Wednesday and retail sales on Thursday.

EURO

The Euro has continued its post-ECB recovery today as EUR/USD climbed to a fresh two-week high of 1.1351. The single currency showed some notable resilience last week despite weaker than expected German growth forecasts and CPI data.

Euro Zone wages and German ZEW figures are out tomorrow followed by Euro Zone consumer confidence on Thursday and Markit PMI on Friday.

JAPANESE YEN

The Japanese Yen emerged as one of the weakest G10 currencies last week, as safe-haven demand was limited by gains in global equity markets. USD/JPY was still contained in the 111-112 range with little reaction shown to a relatively mundane Bank of Japan policy statement.

The Bank of Japan minutes are out on Wednesday followed by CPI and manufacturing PMI on Friday.

SWISS FRANC

It was another relatively quiet week for the Swiss Franc with EUR/CHF contained within the 1.13-1.14 range. Domestic impulses were sparse besides lower growth forecasts from the government while safe-haven demand was limited.

Trade figures are out tomorrow while the Swiss National Bank policy statement is due on Thursday.

AUSTRALIAN DOLLAR

The Australian Dollar has kicked off the trading week on the front foot with AUD/USD rising to a two-week high of 0.7120 this morning. Investors appear to be looking through trade headlines with weekend press reports suggesting a Trump-Xi meeting could be delayed until June.

The minutes from the latest RBA policy meeting are out tomorrow.

CANADIAN DOLLAR

USD/CAD briefly dipped below the 1.33 handle last week as the Canadian Dollar benefited from rising oil prices. Friday’s stronger-than-expected manufacturing sales data failed to prompt much reaction, however.

The main data releases appear on Friday where CPI and retail sales are both due.

SWEDISH KRONA

Swedish CPI data fell short of expectations last week but losses in the Krona proved short lived as Riksbank officials again played down the shortfall. EUR/SEK slipped to a one-month low on Friday at 10.4495.

Looking ahead, we await a quiet week data wise with no macro releases due for release.

NORWEGIAN KRONE

The Norwegian Krone rose last week with EUR/NOK reaching a six-week low on Friday at 9.6584. The Krone began the week on the front foot after stronger-than-expected CPI data and was further boosted by rising oil prices and an upbeat Norges Bank regional network survey.

Data releases are sparse this week but we do have the Norges Bank policy decision on Thursday.

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