the next data was issued
08:30 UK RPI-X (May) Y/Y 4,4% 4.0%
08:30 UK Retail prices (May) Y/Y 4,3% 4.2%
08:30 UK Retail prices (May) 0,5% 0.9%
08:30 UK HICP ex EFAT (May) Y/Y 1,5% 1.4%
08:30 UK HICP (May) Y/Y 3,3% 3.0%
08:30 UK HICP (May) 0,6% 0,8%
09:00 EU(15) Trade balance (April) unadjusted, bln +2,2 -2.3
09:00 Germany ZEW economic expectations index (June) -52,4 -43.0 -41.4
The dollar slipped against the euro while sterling sold off widely on Tuesday as traders broadly scaled back expectations of how high U.S., euro zone and UK interest rates will be raised to tame inflation. The dollar initially weakened broadly after the Financial Times and Wall Street Journal reported Fed officials suggesting market expectations of how high and quickly U.S. rates will be raised had gone too far.
The pound fell against the dollar and slid by the most in about two weeks versus the euro after
the U.K. government said inflation quickened to the fastest pace in at
least a decade, fueling speculation economic growth will slow. The
pound's drop against Europe's common currency was the most since June 5
after Bank of England Governor Mervyn King said inflation may breach 4
percent this year.
EUR/USD: Opened in early Europe around $1.5529.
European dealing saw an initial extension of the highs to $1.5551,
sovereign sales noted here, with rate then dipping lower as the market
reacted to comments from ECB's Bini Schmagi. Euro-dollar was trading
around $1.5500 prior to the release of weaker than expected German Zew
data, subsequently hitting lows around $1.5465. Time spent here was
brief however, with rate pushing back to $1.5510 before settling around
$1.5490 into early US trade. Offers $1.5550/65, stops above, offers
$1.5580, bids $1.5460/50
GBP/USD: Opened early Europe at $1.9681. European
dealing opened with cable extending the day's highs before running
into supply around $1.9700. Rate eased to $1.9660 before a brief spike
higher as UK inflation data came in stronger than expected. A sharp
sell-off from here saw cable triggering stops under $1.9650 and
$1.9620. sliding to $1.9560 ahead of the release of the explanatory
letter to the Treasury from BoE's King. More choppy trade saw cable
spiking to $1.9600 before selling off again as King suggested there was
"good reason to believe above target CPI is temporary". Cable was
extending lows under $1.9480 into early US trade, while euro-sterling
advanced to stg0.7952.
USD/JPY: Opened in early Europe around Y107.88.
European dealing saw dollar-yen edging back towards the Asian base,
this area ultimately giving way. with rate slipping to Y107.61 before
running into decent demand. Stops under here held firm, with the pair
pushing back above Y108.00 and ending the morning at Y108.10. Euro-yen
dropped back through the Asian base to Y167.05 before bouncing to
Y167.60 ahead of the US open. Dlr-yen bids Y107.60, stops Y107.50/20,
offers Y108.30, Y108.60
Markets focus will be on US data, including Housing starts, Building permits, PPI and Industrial production.