Friday saw the release of CPI figures for the U.S. and it seems to be a much more positive sign of recovery from their economy. Focus was turned to Core CPI, with the annual figure being better than expected at 1.8%. Though the annual CPI figure fell to a negative 0.1%, many saw this being considerably weighted upon by the fall in oil prices. With oil prices beginning to make a positive turn, and Core CPI figures being more reassuring, next month’s CPI is expected to start a surge. Last week saw the USD index reaching lows around the 97 mark, with GBP/USD peaking around the 1.505 mark and EUR/USD breaking above the 1.08 level.
This morning has seen the USD begin paring back its losses from last week, after the more positive figures released on Friday. With GBP/USD breaking back below the 1.5 mark and EUR/USD breaking below the 1.08 mark. With Q1 showing a slowing pace to the U.S recovery, many anticipate the coming months to show a much more positive turn, as Q1 is usually considered to convey the weakest set of data for the year. Many hawkish members of the Fed are still standing by a June rate hike, as they see a more positive turn in data to come and see recent weak U.S data as temperamental. However the timing of a rate hike is still in the air, as it will be mostly data dependent on Q2.
With growing concerns over the Greek Debt negotiations and the UK looking ever more likely to reach a hung parliament, the political and economical uncertainty is likely to weigh on the GBP and Euro, as they look to make a turn off their highest levels printed last week.
The largest focus of this week will be the Eurogroup meeting on Friday, where an initial deadline was set for negotiations to be complete. While continued speculation on U.S. data is likely to reinforce the timing of a rate hike.
That’s the wrap for today. Take Care on your trading endeavours.