The Japanese yen and Swiss Franc remain the weaker major currencies as the week starts. While there was not specific mentioning of the currency markets in the post G8 meeting statement, the group of finance ministers raise concern that rising commodity prices is now becoming the biggest threat to the world's economy. The statement said that "elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable, and may increase global inflationary pressure.
" The statement echoed recent comments from Fed and ECB officials on the threat of inflation and was supportive to market's speculation that both are on the road to rate hike. While Asian Stock markets do stage a strong rebound today, weakness in yen and swissy is believed to be more related to expectation of widening rate gap rather than improvements of risk appetite.
Talking about inflation, Eurozone HICP final will be released today and is expected to be at 0.6% mom, 3.6% yoy in May. ECB Tumpel-Gugerell said that inflation would remain above 3.0% in short term and the current high reading of 3.6% should be interpreted as a warning signal. Released in early US session, Swiss retail sales climbed 2.4% mom in Apr, above expectation of 2.0%.
In the US session, Empire state manufacturing index is expected to stay negative at -3 in Jun. NAHB housing market index is expected to be unchanged at 19 in Jun. TIC capital flow is expected to drop to 75b in Apr.
" The statement echoed recent comments from Fed and ECB officials on the threat of inflation and was supportive to market's speculation that both are on the road to rate hike. While Asian Stock markets do stage a strong rebound today, weakness in yen and swissy is believed to be more related to expectation of widening rate gap rather than improvements of risk appetite.
Talking about inflation, Eurozone HICP final will be released today and is expected to be at 0.6% mom, 3.6% yoy in May. ECB Tumpel-Gugerell said that inflation would remain above 3.0% in short term and the current high reading of 3.6% should be interpreted as a warning signal. Released in early US session, Swiss retail sales climbed 2.4% mom in Apr, above expectation of 2.0%.
In the US session, Empire state manufacturing index is expected to stay negative at -3 in Jun. NAHB housing market index is expected to be unchanged at 19 in Jun. TIC capital flow is expected to drop to 75b in Apr.