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ECB decision and UK inflation set the tone for FX this week

The US Dollar Index held near 100.8, while markets will also watch US jobless claims and preliminary S&P Global PMIs for direction.

Reported · Written up by our desk · Central Banks

FX markets are set to swing around a data-heavy week led by the European Central Bank’s rate decision, with the US Dollar staying sensitive to shifting Fed expectations and global risk sentiment in a relatively quiet US economic calendar, according to FXStreet.

In the US, Initial Jobless Claims are expected to rise to 212K from 208K on Thursday, before Friday’s focus turns to preliminary S&P Global PMIs and New Home Sales. The outlet also noted the prior Composite PMI reading of 51.9, with Manufacturing at 53.9 and Services at 51.2, which can influence whether traders lean toward a firmer or softer USD.

For Europe, EUR/USD was cited near 1.1440 ahead of a busy Eurozone schedule, including German producer inflation on Monday and surveys plus the ECB Bank Lending Survey on Tuesday. Expectations for the ECB are for the Main Refinancing Operations Rate to remain at 2.40% and the Deposit Facility Rate at 2.25% on Thursday, with investors watching the policy statement and press conference for guidance on inflation and any potential for further rate increases.

Sterling was also marked lower, with GBP/USD around 1.3450 as the week includes key UK labor market and inflation-related releases, including a forecast for earnings excluding bonuses to rise 3.4% on Tuesday, FXStreet said. Preliminary French, German, and Eurozone PMIs on Friday are expected to add further evidence on regional growth momentum.

Latest closeEUR/USD 1.145 ▼0.2%|GBP/USD 1.348 ▼0.5%

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