USD

The Dollar begins the week under pressure again, with the Dollar Index now on the cusp of retesting multi-month lows as markets keep an eye on US inflation numbers set for Wednesday. In addition, Federal Reserve's loan officer survey, due later this morning, could also affect the greenback depending on the severity of the impact of tighter monetary policy on US banks. Market participants will continue to watch closely as lawmakers negotiate a resolution to the US debt ceiling saga. The Treasury Secretary has warned that the US could default on its debt by June 1st.

  

EUR

Despite a temporary slip on Friday after strong US jobs data was released, EUR/USD quickly recovered and moved further to the upside early this morning. The pair continues to hover near one-year highs despite poor investor confidence numbers out of the Eurozone this morning – in addition to a big miss on German month-over-month industrial production data. 

The next big day on the economic calendar for the Euro will come Wednesday, when German inflation numbers are due for release, followed by US inflation a few hours later.        

GBP

Anticipating this Thursday's Bank of England's interest rate decision, the Pound maintained its position near May 2022 highs. UK policymakers are expected to raise interest rates by 25 basis points to 4.5% in an effort to curb persistent inflation. GBP traders will also watch Friday's GDP and manufacturing figures out of the UK to gauge the British economy. 

The most recent Markit PMI survey for April indicated strong output growth, giving markets some hope that the UK may be able to fend off a recession for the time being.

JPY

Following its first weekly gain since early April, the Yen is experiencing a slight retreat this morning after strengthening over 1% against the Dollar last week. The minutes from the recent Bank of Japan policy meeting (March 9-10) revealed that members voiced their support for maintaining a dovish monetary policy approach to achieve stable inflation. While some policymakers acknowledged positive signs of progress toward the Bank’s inflation target, they also highlighted the importance of remaining cautious regarding the potential risk of higher-than-expected inflation.

CAD

The Loonie is trading near three-week highs to start the week after Friday’s strong Canadian jobs report alongside stronger oil prices lifted the commodity-linked currency. With the Canadian economic calendar providing little for markets to chew on this week, USD/CAD will likely be driven by broader risk sentiment, reactions to US inflation and consumer sentiment data set for release this week, and any updates from Washington on US debt ceiling negotiations. 

MXN

The Peso closed out the week firmly in the green, up 1.33% against the greenback after Friday’s close, but begins this week slightly on the backfoot ahead of tomorrow’s inflation data out of Mexico. MXN traders will be keen to see if inflation does show signs of improvement, as this will only improve the likelihood of the Bank of Mexico remaining on the sidelines at its May 18 policy meeting – which is what markets are currently pricing in. Outside of tomorrow’s inflation, the next key release is set for Friday, with industrial output figures on tap. 

BRL

USD/BRL continued its tumble last week, posting a 0.70% decline. That makes it six losing weeks out of the pair's last seven as LATAM currencies remain red-hot. BRL traders now turn to Brazilian industrial output numbers set for release this Wednesday. 

Consensus expectations are for the Match year-on-year number to come in at 0.2%, which would be a big step up from the previous reading showing a 2.4% decline. In addition, the month-on-month figure is projected to show a 0.7% gain – up from the previous month's 0.2% decline.     

CNY

The Yuan begins the new week down against the Dollar as concerns rise about the impact that global economic slowdowns will have on the export-driven Chinese economy. 

To boost local spending and investment, the Chinese government has pressured their banks to further reduce interest rates on their deposits. In addition, CNY traders will closely monitor the release of China's April export data at 11:00 pm EST and Wednesday's new loans and inflation data to better gauge the health of China's economy.