There was a positive start to the week for the US dollar as it strengthened against sterling for the first time since the UK General Election.
Positive housing and building data on Tuesday, coupled with both a weak euro and weakened sterling contributed to the strength seen by the US dollar – which gained two cents against both currencies. US Federal Reserve minutes released Wednesday were unconvincing and uncertain about the timing of a possible interest rate – although they made clear that a June hike would be too soon. Market expectations have now pushed back the possibility of a rate rise until the first quarter of 2016.
As a result of this, and much better than expected retail sales data from the UK, the US dollar weakened and is back close to levels against sterling seen at the start of the week. Data releases on Thursday also failed to give the US dollar relief, as the weekly unemployment claims, manufacturing purchase managers index (PMI) and existing home sales all failed to match expectations.
Both US Federal Chairwoman Yellen and member Williams speak today – with the focus on any indication of a possible interest rate rise. US inflation is also due out today, with the expectation of a slight drop on last month.