Good morning,

EUR: Key inflation data due

We have high impact news for the Euro at 10:00 BST with Consumer Price Index YoY and April’s unemployment rate due. Inflation has been priced in for a drop from 1.3% to 0.% (core) and 1.7% to 1.3% respectively. Unemployment is expected to hold at 7.7%.

Diving into the data a little further, we had the “Easter effect” pushing inflation along, but May’s reading should be more of a reflection of the inflation pressures being felt. The ECB will be watching closely as their current outlook on inflation remains very bleak, with major hopes of recovery being pinned back by the trade war situation and weaker Chinese growth. Market expectations continue to downgrade their outlook for the Eurozone inflation and are in-line with the 2016 lows. This could be a tough day for the Euro.

USD: Manufacturing slowdown adds to wider economic concerns

There is no noteworthy data due out from the US today. The Federal Reserve’s Jerome Powell is pencilled in to speak this afternoon as part of the “Fed Listens” – whilst the theme is the wider monetary policy, the focus of the conversation will be pushed towards the current strategy and framework for cash rates. James Bullard has become the first open member of the FOMC to be actively pushing for a rate cut, quoting that it would help recentre current inflation and inflation targets. There is now a 50bp rate cut priced in for 2019, followed by a further 50bp easing in 2020.

The US ISM manufacturing drop from yesterday should be a firm reminder for clients who are trading internationally in the Dollar, that the US economy has now joined the global slowdown.

Have a great day.