EUROPEAN session review: Pound rises for the fifth consecutive day

Data released: 

08:00 GMT EMU Current Account n.s.a (Mar) €20.9B €20.0B €13.8B 

08:00 GMT EMU Current Account s.a (Mar) €18.8B €23.0B €21.8B 

08:30 GMT UK Bank of England Minutes 

08:30 GMT UK Retail Sales (YoY) (Apr) 6.9% 5.2% 4.8% 

08:30 GMT UK Retail Sales (MoM) (Apr) 1.3% 0.5% 0.5% 

08:30 GMT UK Retail Sales ex-Fuel (MoM) (Apr) 1.8% 0.5% 0.1% 

08:30 GMT UK Retail Sales ex-Fuel (YoY) (Apr) 7.7% 5.3% 4.9% 

Today’s focus will be on a release of minutes of the Federal Open Market Committee’s April 29-30 meeting, when the central bank pared asset purchases to $45 billion per month. 

Investors remained cautious ahead of European Parliament elections later in the week. The elections kick off on Thursday, when voting begins in the U.K. The last countries vote on Sunday, and the results from all 28 member states should start to be revealed on Sunday night. 

EURO 

Data released showed European Monetary Union Current Account s.a came in at €18.8B below forecasts (€23B) in March. 

EUR/USD fell to $1.3670. Initial resistance remains at $1.3770/80. Support comes at recent lows on $1.3640 (also Feb 24 lows). Break lower will open the way down to $1.3560 (Feb 12 lows). 

POUND 

Data showed UK retail sales grew 1.3% in April versus 0.5% expected, and 6.9% vs 5.2% YoY. 

BOE MPC minutes showed: 

-all members agree that they need to see more evidence of slack reducing before raising rates; 

-decision on whether to raise rates now ” more balanced” for some members. 

The MPC minutes seemed somewhat more hawkish than what is expected from the Federal Reserve minutes, to be released later today. The housing market is a greater concern in the UK than in the US. 

GBP/USD extended gains to $1.6920 after UK retail sales for April came in much-stronger-than-expected. Currenctly rate retreates. Strong support is near $1.6750 (trend line from Nov 11’2013). Below support comes at $1.6660 (Apr 15 lows). 

YEN 

USD/JPY has developed a modest downtrend recently, but a deep fall is not expected. The BoJ existing policy will eventually further ease monetary conditions and ratchet up downward pressure on the JPY. 

USD/JPY remains under pressure. Losses may widen to Y99.50 (Nov 19’2013 lows). Resistance is around Y102.00 with a break above targets Y102.75 and Y103.40. Stronger one remains at Y104.30/80. 

DATA AHEAD 

At 14:30 GMT EIA Crude Oil Stocks change come. 

At 15:00 GMT, 16:50 GMT and 17:30 GMT Fed's Yellen, Fed's George and Fed Minneapolis's Narayana Kocherlakota speak. 

Later, at 18:00 GMT, focus will be at FOMC Minutes.

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