FED and BoE up this week

The euro starts the week at $1.12 to the dollar and 89p to sterling. The euro had got up to $1.13 during last week but lost all of its gains and a little more late on Friday to end up back just above $1.12. Major equity indices were flat or made small losses for the day on Friday, paring back the modest weekly gains, while bond yields ground lower

US data released on Friday included retail sales and industrial production for May. Both were solid with retail sales up 0.5% month-on-month (and April’s number revised up) while industrial production bounced back from a weak April to grow 0.4%

This data may help reassure the FOMC and keep them ‘patient’ at this week’s meeting which concludes Wednesday, as it suggests that the US consumer is holding up and the problems in the manufacturing sector may not be as bad as feared

Elsewhere this week the BoE hold a regular meeting on Thursday with no change expected. The slightly more hawkish tone from Governor Carney and other MPC members of late may be sterling supportive but has to be balanced against Brexit risks and, on that front, the other big UK event this week is the Tory leadership race getting down to its final two candidates

Quiet day data-wise with euro area labour costs due for release while ECB President Draghi kicks off the ECB’s Sintra conference in Portugal this evening