01/05/2018 - Slow Down In European Retail Sales

EUR

Consumer prices in Germany, Italy and Portugal grew less than expected in April. Price growth in Italy and Portugal was a miserable 0.6 percent with Germany’s reading closer to the mark at 1.4 percent but still came in below analyst expectations. These figures raised questions about the ECB’s plans to wean reduce the supply of easy money in the EU. The ECB has been widely expected to wind down its 2.55 trillion bond-buying program by the end of the year and Mario Draghi expressed confidence in the economic outlook after last week’s policy meeting. However a number of softer-than-expected economic indicators since the start of the year has been casting a shadow on the ECB’s plans, which are predicated on euro zone inflation hovering around 1.5 percent in the remainder of the year.

USD

U.S. consumer prices accelerated in the year to March, with a measure of underlying inflation surging to near the Federal Reserve's 2 percent target as last year's weak readings dropped out of the calculation. Consumer prices as measured by the personal consumption expenditures (PCE) price index jumped 2.0 percent year-on-year in March. That was the biggest gain since February 2017 and followed a 1.7 percent rise in February. Stronger inflation figures will put pressure on the fed to raise interest rates. With Fed officials scheduled to meet on Tuesday and Wednesday for a regular policy meeting. The Fed raised rates last month and forecast at least two more rate hikes for this year.

Key Announcements

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