- European politics and the single currency are in focus as we are just over a week away from the first round of the French elections. The political uncertainty has been weighing on the euro, with EURUSD tracking lower towards the end of last week. Weekend polls suggest that Marine Le Pen’s far right National Rally should win the first round of French legislative election with 35.5% share with President Macron’s party getting 21% of the vote.
- European data remains important with ECB officials continuing to watch data ahead of another rate cut and the German Ifo Survey due to be released this morning is usually one of the most reliable early indicators of economic activity in Germany. The June reading out later this morning will provide markets with a better idea about the speed of the recovery of Europe’s largest economy and may give markets an insight into whether the central bank can follow its first rate cut of the cycle with a second move. Inflation data scheduled for Friday from France, Spain and Italy are expected to show that price pressures are moving in the right direction as energy prices continue to fall.
- US inflation remains under the spotlight and Fed officials will be looking for some good news as markets expect the central bank’s preferred inflation gauge – the core PCE deflator to print at its slowest monthly pace this year and slowest year-over-year pace since March 2021. Consumer Confidence data is out tomorrow and is expected to show that US households are tightening their belts, at least judging by the latest retail sales data. An interest rate cut from the Fed is still a long way off and we continue to watch the data for signs of when the first move will be announced.
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