Today’s publication of the March FOMC meeting minutes (1800 GMT) provides the next US focus. At the March meeting, the Committee showed that it was gradually moving closer to delivering a hike in US interest rates by removing reference to being ‘patient’ about normalising monetary policy. However, Fed Chair Yellen sounded cautious on the outlook noting that the FOMC wanted to see further improvement in the labour market and needed to be “reasonably confident” that inflation was returning to target before raising interest rates.“Any discussion in the minutes around the likely level of inflation needed to prompt the FOMC to raise interest rates will be closely watched. Furthermore, the focus will also be on any areas of disagreement about the Fed’s near-term reaction function, notably on the influence of the dollar on the economic outlook”, says Lloyds Bank.
Ahead of these, data releases from the euro area are expected to show further signs of improvement. Accroding to Lloyds Bank, German factory orders (0600 GMT) are expected to have rebounded strongly in February by 1.2% on the month, consistent with signals from surveys such as the manufacturing PMI which reported a firming in new order flows. Meanwhile, euro area retail sales (0900 GMT) are expected to maintain a solid pace of annual growth, reflecting the strong contribution to GDP growth in recent quarters from household spending.
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