On Friday the dollar fell across the board as US confidence fell to a multi-decade low due to rising uncertainty about future living standards has caused consumers to adopt more prudent spending plans and become more wary of incurring new debt. Investors turned their focus on the University of Michigan’s survey of consumer confidence with fell to a 28 year low of 59.5 during May. The news sent the Greenback lower again, plummeting to 1.5600 against the EUR and down from 105.10 to 103.50 for the Yen. The Euro also received a boost with EUR/GBP coming close to breaking the key .80 level after ECB president Trichet’s hawkish comments on fighting inflation creating doubts of rate easing this year.
Looking towards the week ahead the calendar for U.S economic data again is fairly light with April PPI and New Home sales the main events later in the week whilst in Europe this week ZEW and IFO Survey’s followed by Industrial Orders and Manufacturing PMI will hold the key.
On Wednesday the minutes for the last Federal Reserve and Bank of England meetings will be released. The Banks decision to leave rates at 5% will be expected to register an 8-1 vote especially in light of 3% inflation recorded for April. Any divisions within the MPC will indicate that there are some doves who may push for rate cuts in the 3rd quarter.