It is a quiet day for the markets with only a handful of data due.
Early this morning, we have the German employment figures, followed later by the US factory orders & JOLTS – job opening numbers.
Markets will be looking ahead to this week’s ECB monetary policy announcement on Thursday and the US labour market report on Friday.
There is a high expectation that the ECB will cut rates on Thursday. Because of this, the decision itself is unlikely to be a shock to markets, what will move the market is the guidance thereafter on future rate cuts.
As always, the highlight is the meeting that follows the rate announcement. There is still a strong chance the euro will weaken towards the end of the week following the announcement.
Sterling has begun the week in buoyant fashion, touching 3-month highs against the US Dollar and holding on to its end-week gains against the euro.
This comes on the back of a 21-month high against the euro after Mays inflation figures showed that April inflation was stronger than had been expected. This helped sure markets that an interest rate reduction was unlikely to happen in June, which boosted the pound.
The euro to dollar exchange rate hit a new three-month high overnight, following recent data out from the US that has been softer than expected.
All eyes in the US will be on Friday’s data.