Similar to the US, an empty economic calendar and lack of G8 commentary provided little spark for euro trade, leaving the currency to saunter lower. A euro bid tone could re-emerge over the course of the week, though, as event risk out of the Euro-zone is filled with sentiment reports with the ZEW, IFO, and GfK surveys all scheduled to be released.
The ZEW and IFO releases are both anticipated to reflect growing optimism amongst investors, as equity markets continue to reach new highs and businesses throughout the Euro-zone outperform. Meanwhile, consumers are forecasted to show more confidence in the economy in the GfK survey, as labor market conditions are perpetually improving. Nevertheless, hot inflation remains the key factor for European Central Bank policy decisions, so we will likely have to wait for Trichet?s commentary following the June 6th rate announcement for a more accurate gauge. Meanwhile in Switzerland, producer and import prices gained the most in 14 years in April, pointing to potentially higher CPI figures. Moreover, the KOF leading indicator is anticipated to be quite encouraging on Friday given the resilience of consumption and trade, and with the SNB stating their desire to continue normalizing rates, a strong KOF figure combined with mounting inflation may bring traders to price in a hike on June 14th.