All eyes on the US & UK rate decisions

With some European and Asian markets closed yesterday we are still on high alert as on Sunday, US President Donald Trump suggested that his administration could strike trade deals with some countries as soon as this week, offering the prospect of relief for trading partners seeking to avoid higher US import duties, Reuters reported.

BP: After hitting 3yr highs last week, GBP/USD has fallen back to the 1.3325 level after retracing to lower levels – despite by the USD weakening slightly yesterday. The Bank of England is widely expected to cut rates on Thursday by 0.25% and continue that trend (of successive 0.25% cuts) through the summer.

 GBP/EUR is sidelined around 1.1740 at the moment.

 USD: The CME FedWatch tool shows the chance of an interest rate cut by the Federal Reserve in May's meeting (this Wednesday) stands at 3.2% against a 96.8% probability of no change. The June meeting sees a 31.8% chance of a rate cut. The Press Conference on Wednesday evening will be closely watched but the Fed will want to avoid any shocks to already volatile markets.

EURO:  The ECB is expected to continue lowering interest rates at the next meeting in June despite the increase in Eurozone inflation in April. EUR/USD climbs to near 1.1360 during the North American trading hours on Monday after recovering from the three-week low of 1.1265 posted last week. The major currency pair gains as the USD slumps on persistent uncertainty over United States-China trade relations and as investors turn cautious ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

Taiwan: On Monday after the Taiwan Dollar (TWD) surges over 5% and triggers a spillover effect in Asian currencies against the Greenback. It is the biggest intraday gain in over three decades, on speculation that exporters are rushing to convert their holdings of US Dollars to the island’s currency

 This week’s data:

Tuesday
China: Services data
Switzerland: Central Bankers speech
UK: Central Bankers speech
NZD: Employment data

Wednesday:
EURO: Retail Sales
USA: Interest rate decision and press conference (no change expected) 

Thursday:
US: Durable Goods Orders & Fed member speech
UK: Bank of England interest rate decision and Press Conference (0.25% cut expected)

Friday:
China: Import & Export data
CAD: Employment data
UK: Central Bankers speech
USA: Central Bankers speeches