After flirting with its all time highs yesterday, profit taking has hit the EUR/USD. More upside surprises in economic data however continues to suggest that economic growth in the region is accelerating. German consumer confidence increased from 4.4 to 5.5 for the month of May while French business confidence increased from 109 to 111 in the month of April. These measures of stronger sentiment follow similar upside surprises in German analyst and business confidence.
It seems that everyone in the Eurozone from businesses to consumers is happy which means that we could also see stronger spending in the weeks ahead. In addition to the confidence data, we also had import prices, which increased more than expected. This suggests that we could see also firmer retail PMI numbers tomorrow. Overall, incoming economic data only further confirms that the economy could weather another interest rate hike so the ECB should have no hesitations about raising interest rates in June. Meanwhile Switzerland will be releasing the KoF leading indicators tomorrow. Upside surprises in the UBS consumption indicator, retail sales and the Swiss ZEW survey suggests that the number could be very positive for the Swiss Franc. EUR/CHF is struggling to extend its rally and a weak number could easily reverse the currency pairs two day rise.