European FX Outlook: Pressure on Iran lifts oil, but does little to the US Dollar

What you need to know before markets open

• The US President Trump has unilaterally withdrawn from the Iran nuclear deal and will enact the sanctions on Tehran again.
• The lower rank macro releases in Europe give the way for the broad-based US Dollar strength to extend.
• The core US factory gate inflation is expected to decelerate slightly in April, with the key inflation data scheduled for Thursday with consumer price index due.
• The Reserve Bank of New Zealand is expected to hold rates unchanged with markets focused on alternations of rate outlook in the first policy statement under new governor Orr. For details read my Preview here.

Wednesday’s market moving events

• French industrial production is expected to rise 0.4% m/m in March.
• Italian retail sales are seen rising 0.1% y/y in April.
• The US core PPI is expected to rise 0.2% m/m in April while increasing 2.4% y/y.
• Canada’s building permits are seen rising 2.0% y/y in March.
• Atlanta Federal Reserve Bank President Raphael Bostic to speak at the World Affairs Council in Jacksonville, Florida at 17:15 GMT.
• The RBNZ is expected to keep the policy rate unchanged at 1.75% with the governor speaking at the press conference an hour after the rate decision. For details read my Preview here.

Major market movers

• The US Dollar is broadly higher after the Federal Reserve Bank chairman Powell comments on some institutions not ready for the gradual interest rate hike in the US.
• The broad-based US Dollar strength seems unaltered by the announcement of the US President to withdraw from the nuclear deal with Iran, while oil prices pared 2%-3% loses on the news.
• Watch NZD being boosted by possible changes in the outlook for the monetary policy as RBNZ meets. For details read my Preview here.

Tuesday’s macro summary

• China’s trade balance reached a surplus of $28.8 billion in April.
• German industrial production rose 1.0% m/m while increasing 3.2% y/y in March.
• German trade balance rose to €25.2 billion in March with exports rising 
• The Federal Reserve’s chairman Jerome Powell said at the event organized by the Swiss National Bank and International Monetary Fund, in Zurich that “some investors and institutions may not be well positioned for anticipated US interest rate hikes.” 
• Halifax house price index fell unexpectedly strong by -3.1% m/m in April.
• The US small business optimism increased slightly to 104.8 in April. 
• Canada’s housing starts rose 214K in April.