However with such a spectacular move, the big question on everyone’s mind is whether the currency’s momentum can be sustained this week. As indicated by the sharp drop in consumer confidence, vulnerabilities still exist in the US economy. According to the University of Michigan , consumer confidence for the month of June fell to the lowest level in 28 years.
The economic calendar this week is faintly light with only moderately market moving reports due for release. This includes producer prices, the current account, the Treasury International Capital report, housing starts, building permits, industrial production, leading indicators along with the Philadelphia Fed and Empire State manufacturing surveys. Meanwhile there are also a few Fed speeches on the docket who will most likely verbally confirm the central bank’s hawkish monetary policy bias.
In the EZ, we look towards consumer prices, the German ZEW survey and producer prices.
The British pound has strengthened against all of the major currencies except for the US dollar which indicates that the strength of the greenback is the primary reason for the GBP/USD’s drop towards 3 month lows. UK economic data should return to the forefront this week and drive the fluctuations in the British pound. Consumer prices and retail sales are expected along with the minutes from the most recent monetary policy meeting. We believe most of these reports will be pound bullish as inflationary pressures in the UK continue to grow.