GBP

The pound failed to gain any traction from upbeat unemployment data released earlier this morning. Figures published by the Office of National Statistics (ONS) showed the unemployment rate in the UK falling to 3.8% in the 3 months to February, which is below the level immediately before the coronavirus pandemic. The last time the British unemployment rate was lower than 3.8% was in 1974. The data also showed the number of job vacancies hitting a fresh record high in the 3 months to March at 1.288 million, a concern to Bank of England policymaker of the wage inflation this could cause as they consider more aggressive rate hikes. The pound’s demand today will be heavily influenced by geopolitical concerns, as well as an inflation print from the US.

EUR

The euro has once again begun the day on the back foot against a broadly stronger dollar and is having a tough time finding demand amid the souring market sentiment mood. The single currency showed little reaction to annual inflation data in Germany, as measured by the Harmonised index of Consumer Prices (HIPC) which rose by 7.6% in March, a figure, which matched market expectations. This morning the European Central Bank will report the Bank Lending Survey which will provide a glimpse of financing conditions in the bloc. Economic sentiment surveys for Germany and the Eurozone will also be released today. Although this economic data may influence the euro’s fortunes, its main driver this week will be the ECB’s monetary policy announcement on Thursday.

USD

In absence of any major data releases on Monday, the dollar capitalised on souring risk sentiment and has continued to gather strength in early trading against its major rivals. The greenback benefitted as the conflict in the Ukraine is expected to intensify over the coming weeks and there are fears that Russia could resort to using chemical weapons, which many members of NATO have stated is a “red line” and this could force the alliance to intervene directly in the war. Later today, the markets attention will focus on the release on inflation data from the US, in the form of the Consumer Price Index. Although, the Federal Reserve Bank has already announced that they will raise interest rate seven this year, if the inflation data comes in higher than expected it may Force the central bank to tighten monetary policy to a greater extent over the coming meetings and add further support the dollar.

Economic Calendar

10:00 EUR ECB Bank lending survey
10:00 EUR ZEW economic Survey (GER)
10:00 EUR ZEW economic survey (EUR)
13:30 USD US Consumer Price index