European FX Outlook: Eurozone inflation set to stagnate in April as ECB says goodbye to outgoing vice-president Constâncio

What you need to know before markets open

• The US benchmark 10-year Treasury yields rose to 3.089% on Tuesday boosting the US Dollar across the board with reaching 2018 highs against Euro and almost touched the 2018 high vs Sterling.
• Gold fell past 1,300 level for the first time in 2018.
• North Korea said it will not attend leaders summit in Singapore should “one-sided demand” concerning nuclear weapons prevail.
• German and the Eurozone inflation data headline the European session with both data sets expected to come in well below the ECB’s 2% inflation target.
• The ECB is organizing the Colloquium in honor of the outgoing Vice President Vítor Constâncio with many ECB officials participating.
• The US housing market data headline Wednesday together with the central bankers' speeches.

Wednesday’s market moving events

• Australian wages price index rose 0.5% Q/Q in the March quarter this year, missing the market forecast of 0.6% increase.
• The Econfin-the Eurozone finance ministers summit-takes place in Brussels.
• German inflation is expected to confirm the preliminary fall of -0.1% m/m while rising 1.4% y/y in April.
• The Eurozone core inflation is expected to rise 0.2% m/m while increasing 0.7% y/y in April.
• ECB President Mario Draghi is set to speak at the honorary event for outgoing vice-president Vítor Constâncio, in Frankfurt at 12:15 GMT.
• The US housing starts are seen falling -1.1% m/m while the US building permits are expected to fall -2.3% m/m in April.
• Atlanta Federal Reserve Bank President Raphael Bostic will deliver an economic update at a fireside chat in August, Georgia at 12:30 GMT.
• Canada’s manufacturing sales are expected to rise 1.2% m/m in March.
• The US industrial production is expected to rise 0.6% in April.
• ECB chief economist Peter Praet is also scheduled to speak at the honorary event for outgoing vice-president Vítor Constâncio.
• The Bank of Canada Deputy Governor Lawrence Schembri is scheduled to speak at a luncheon hosted by the Chartered Financial Analyst Society of Ottawa and the Ottawa Economics Association at 16:00 GMT.
• The Swiss National Bank Governor is scheduled to speak about the Sovereign Money Initiative at a Vollgeld event, in Zurich at 16:00 GMT.
• St. Louis Federal Reserve Bank President James Bullard is scheduled to give opening remarks at the Homer Jones Memorial Lecture in St. Louis at 22:30 GMT.

Major market movers

• The US Dollar was boosted across the board with the selloff on the US Treasuries saw the benchmark Treasury yields rising to the highest level since summer of 2011.
• The US Dollar rose close to 2018 highs against the European majors EUR and GBP.
• The FX market is set for consolidation phase after the US Dollar rally.

Tuesday’s macro summary

• China’s industrial production accelerated to 7.0% y/y in April.
• German Q1 GDP rose 0.3% Q/Q while rising 2.3% y/y, missing the market expectations.
• French CPI rose 0.2% m/m and 1.6% y/y in April.
• French private payrolls slowed down in Q1 2018 to 0.3% Q/Q that is +57,900 jobs after +0.4% in Q4 2017.
• The Bank of Japan Governor Kuroda said it is true that some discussions are being made at BOJ board on side-effects of easy policy while confirming that the BoJ has no plan to move 10-year yield target for time being as inflation distant from 2% target.
• The UK wages excluding bonuses rose 2.9% y/y and decelerated to 2.6% y/y including bonuses in three months to March, meeting the market estimate. The unemployment rate remained unchanged at 4.2% but the claimant count rose 31.2K against 7.8K expected in April. For details read my analysis here.
• German ZEW index of investors sentiment remained unchanged at -8.2 in May after falling sharply in previous two months. 
• UK parliament holds Inflation Report hearing hosting the Bank of England officials including Governor Mark Carney.
• The Eurozone GDP is expected rose 0.4% Q/Q while increasing 2.5% y/y in line with expectations.
• The Eurozone industrial production rose 0.5% m/m while increasing 3.0% y/y in March.
• The New York Empire State manufacturing index is increased to 20.1 in April.
• The US core retail sales rose below expectations by 0.3% m/m in April while control group included in US GDP report rose in line with expectations by 0.4% m/m.