European FX Outlook: Outgoing ECB Vice President in the spotlight

What you need to know before markets open

• The US benchmark 10-year Treasury yields rose to 3.10% overnight boosting the US Dollar further.
• New Zealand government’s first Budget is projected to run operating surpluses with net core Crown debt expected to fall below 20% of GDP by 2022.
• Rumors of the UK staying in a customs union with EU after Brexit are helping Sterling to recover from recent selloff. 
• Little-to-no macro data scheduled for Europe with the ECB Vice President Vítor Constâncio speech headlining the day.
• Weekly labor market statistics are due in the US together with several Fed speakers and the Bank of England chief economist Andrew Haldane speech.

Wednesday’s market moving events

• The Eurozone construction output is expected to fall -0.1% m/m in March. 
• ECB Vice President Vítor Constâncio is delivering closing remarks at the Colloquium in his honor organized by the ECB in Frankfurt at 10:30 GMT.
• ECB Vice President Vítor Constâncio is due to speak at the third annual ECB macroprudential policy and research conference, organized by ECB in Frankfurt at 12:00 GMT.
• The US initial jobless claims are expected to reach 215K in the week ending May 11.
• Philadelphia Fed survey is seen decelerating to 21.0 in May.
• Minneapolis Federal Reserve Bank President Neel Kashkari is scheduled to participate in a moderated discussion with the executive director of the Minnesota Home Ownership Center at 14:45 GMT.
• The Bank of England chief economist Andrew Haldane is scheduled to deliver closing remarks at the Economic Statistics Centre of Excellence Conference on Economic Measurement, in London at 16:00 GMT.
• Dallas Federal Reserve Bank President Robert Kaplan is expected to participate in a moderated discussion at the Richardson Chamber of Commerce in Richardson, Texas at 17:30 GMT.

Major market movers

• The US benchmark Treasury yields jumped higher to 3.01% on Wednesday pushing the US Dollar to stronger levels.
• The US Dollar rose to new 2018 high of 1.1760 against EUR but retreated some 100 pips off highs on Thursday against GBP to 1.3560.
• The FX market is set for consolidation phase after the US Dollar rally.

Wednesday’s macro summary

• 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 remained unchanged over the month in April while rising 1.6% over the year. On the harmonized basis, German inflation fell -0.1% m/m while rising 1.4% y/y.
• The Eurozone core inflation rose 0.2% m/m while increasing 0.7% y/y in April in line with expectations. 
• The US housing starts dropped -3.7% m/m to 1.287 million units in April while building permits fell -1.8% m/m to 1.336 million-unit rate, both missing sharply the market expectations. 
• Canada’s manufacturing sales rose 1.4% m/m to $57.1 billion in March.
• The US industrial production rose 0.7% in April.
• The Bank of Canada Deputy Governor Lawrence Schembri said that uncertainty about US trade policy currently weighs on business investment and export growth in Canada.
• St. Louis Federal Reserve Bank President James Bullard said he would need to see upside surprises to support further rate hikes.