EUR/USD continues to post slow but steady gains. In the Wednesday session, the pair is trading at 1.2384, up 0.22% on the day. On the release front, there are no major German or eurozone events this week. ECB President Mario Draghi will speak at an event in Frankfurt. In the US, today’s highlight is consumer inflation. CPI is expected to dip to 0.0%, and Core CPI is forecast to remain at 0.2%. As well, the FOMC releases the minutes of its March rate meeting. On Thursday, the ECB releases the minutes of its March rate meeting and the US publishes unemployment claims.
The markets are keeping a close eye on Wednesday’s key releases – CPI and the FOMC minutes. Both events could provide clues regarding the Federal Reserve’s monetary policy for 2018. Will the Fed press the rate trigger three times this year, or four? The current Fed forecast calls for three rate hikes, but this could be revised upwards if inflation rises. If the FOMC minutes point to a hawkish stance from policymakers, the US dollar could respond with gains.
The tariff spat between the US and China appears far from over, but both sides have lowered the flames which ahs roiled the markets in recent weeks. Investors are breathing a sigh of relief after Chinese President Xi Jimping sent out a conciliatory message on Tuesday. Xi was speaking at a development conference in China, and promised to lower tariffs on vehicle imports into China. This has been a major sticking point between the US and China, with President Trump complaining that China has a 25% tariff on US vehicle imports, yet the US only charges 2.5% on Chinese vehicles. Xi added that China was looking to solve issues through dialogue rather than confrontation, and the markets are hoping that the US and China can avert a trade war, which could drag down the global economy.
