U.S Consumer Confidence figures yesterday showed an unexpected improvement in May after what had been a worryingly painful three months prior, with optimism surrounding the labour market falling, as well as worries around inflation growing. The unexpected confidence saw the USD gain slightly against Sterling yesterday, as the survey also showed that consumers were very upbeat as many planned to purchase major household goods within the next six months. Whilst the economy is expected to slow at some point this year, mainly down to impact of cumulative interest rate hikes totalling 525 points to bring inflation down, many business executives are looking at growth later in the year and so it shouldn’t be a surprise to see Consumer Confidence also climb further.
The focus today is on Germany’s Inflation release at 1pm with figures expected to show a slight increase from this point last year. One of the main contributors to this would be that last May prices on public transportation were actually lowered, so any slight increase in prices would reflect an upturn in these figures. Nevertheless, today’s numbers will give us an indication as to how Europe’s numbers will come out on Friday. Current forecasts show Inflation is likely to remain at 2.4%, but whether this has an effect in regards to pending interest rate cuts I would think is highly unlikely.
The rest of the calendar this week is fairly busy, with GDP Growth figures for the U.S and Canada followed up with Inflation for The Euro-Zone and again The U.S, which could well make a clearer path for both Central Banks when deciding on when they first cut interest rates and by how much.