FX market outlook

Currency markets were relatively quiet during the Asian session, partly due to the absence of key data releases. A lack of a catalyst to move currencies kept most major pairs trading in ranges during the session. The market focus will turn to upcoming US economic data later today.

The dollar remained below the key 114-yen level and edged slightly lower in Asian trading to touch 113.63 yen. A key risk for the greenback will be the US economic data on retail sales and the consumer price index for April. These could have a large impact on the dollar, as the results could affect the Fed’s decision-making in the June FOMC meeting.

Data released on Thursday showed US jobless claims unexpectedly fell last week while producer prices rebounded strongly in April. The upbeat data failed to lift the dollar higher. The preliminary University of Michigan consumer sentiment report is also due later in the day, while speeches from FOMC members Charles Evans and Patrick Harker will attract the market’s attention, as investors will look for clues into the Fed’s policy path.

In other currencies, the euro has been trading in a range around $1.0865 after rebounding from yesterday’s low of $1.0838. Focus now turns to the Eurozone industrial production data due later in the European session.

Sterling consolidated losses against the dollar to trade around $1.2885 after tumbling below the key $1.2900 level following the Bank of England meeting yesterday.

In addition to the US data today, investors will be keeping an eye on the two-day G7 meeting of finance ministers. It starts today in Italy. Markets will focus on US Treasury Secretary Steven Mnuchin for more insight into the US’s view on protectionism and climate change.