Currency View for the Week

The force that has been driving the US dollar thus far, shifts in inflation expectations and relative yield changes,  will remain present for the rest of the week.

Euro zone CPI is expected to rise again this week. This could provide some momentum for the ECB meeting on Thursday.  Further Euro gains may be attained if the CPI is in line with consensus.

The UK GDP instilled fear of a slowdown, as household spending and consumption remain weak. Weak housing data will cause a possible selloff. The Sterling will also be sensitive to the slowdown in Chinese PMI, which is expected to be moderate. 

The Yen will continue to be the most sensitive currency on interest rate differentials versus the dollar, where strong US data prints this week may provide the dollar a break from January’s high near JPY84.00.