Weekly FX Focus

After beginning the month of May in the doldrums, the greenback ended the past week with a strong rally.

    Whilst Fed Chair Janet Yellen’s testimony the had left the impression of a Fed with no firm timetable to hikerates, ECB President Draghi gave an unusually clear signal of a policy move at the next June meeting.

    There will be no policy decision from the Fed this week but a few senior officials will be speaking in the publicforums and the most closely watched will be Yellen. She will be speaking to the US Chamber of Commerce inWashington. Other Fed speakers this week include Atlanta Fed Dennis P. Lockhart (non-voter in FOMC 2014)who is touring Middle East (11 and 13 May), Philadelphia Fed President Charles Plosser (voter in FOMC 2014)on 12 May, Richmond Fed President Jeffrey Lacker (non-voter in FOMC 2014) on 13 May and lastly St LouisFed President James Bullard (non-voter in 2014 FOMC) who will speak on monetary policy on 16 May.

    On the data front, beginning on Monday, markets receive the monthly budget statement, expected an overallbudget surplus of around +$114.0bln in April. On Tuesday, retail sales data for April will be the spotlight,alongside import prices and the NFIB small business optimism index for April. Business inventories for Marchwill also be released. Mid-week, producer prices for April as well as the weekly MBA mortgage applications forthe week ending 9 May will be rolled out. Thursday will be the heaviest day of the week. Consumer price datafor April; the usual weekly jobless claims; TIC flows for March; industrial production/capacity utilization forApril; and the Philadelphia Fed manufacturing releases for May will be due. Ending off the week on Friday,markets will be receiving housing starts/building permits for April, followed by the University of Michiganconsumer sentiment data for May.