Tuesday was once again dominated by US dollar moves despite a lack of any US data. US stocks declined as the Bank of Japan remained steadfast over their current fiscal stimulus. The Dow Jones lost over 1% and the US dollar lost 2.4% against the yen and 0.8% against the pound.

Tuesday was once again dominated by US dollar moves despite a lack of any US data. US stocks declined as the Bank of Japan remained steadfast over their current fiscal stimulus. The Dow Jones lost over 1% and the US dollar lost 2.4% against the yen and 0.8% against the pound.

The pound experienced a mixed bag of data as both industrial and manufacturing data posted poor figures however the National Institute for economic and Social Research (NIESR) released its growth estimate for the three months to May at 0.6%. In itself, the figure was less than expected although at the moment, thoughts that the UK economy can maintain positive growth can only be taken as good news.

Wednesday brings a plethora of data from the US, UK and the euro zone. German inflation has already been released at 0.4%, in line with expectations, followed shortly by the UK employment data at 9:30am. Euro zone industrial production will once again struggle to show anything positive and at 7pm the US Monthly Budget statement will be closely watched for any signs of changes within the US fiscal policy.

Regardless of the fundamental data consistently bombarding the market, it would appear that long term sentiment is currently more in focus. Both the US and the euro zone are seemingly coming under more scrutiny and pressure in relation to the long term economic forecasts. This has opened the door for dollar buyers to take advantage of prices that have been few and far between in recent months.

Price action of the dollar and the yen will be closely watched as a reversal in yen weakness could see the dollar pick up strength once more. The pound is currently taking a back seat and simply riding the small wave of strength that has recently occurred.

Key Announcements:

9.30am – GBP – Claimant Count Change (May): Expected to come in at -5,000.

9.30am – GBP – ILO Unemployment Rate (3M) (Apr):  Expected to remain at 7.8%.

10.00am – EUR – Industrial Production (MoM) (Apr): Expected to fall to -0.3%.

N/A – EUR – Germany Constitutional Court Ruling on OMT Bond Buying.

12.00pm – GBP – BoE Quarterly Bulletin (Q2).

12.00pm – USD – MBA Mortgage Applications (Jun 7): Previous figure was at -11.5%.

19.00pm – USD – Monthly Budget Statement (May).

22.00pm – NZD – Monetary Policy Statement and Interest Rate Decision: Expected to remain at 2.5%.