- EUR/USD holds a positive position around 1.0795 on USD consolidation.
- The ECB's Panetta said the time for the ECB to cut rates is fast approaching, and gradual steps could help ease volatility in markets.
- Many Fed officials agreed that the FOMC may review other economic data before cutting interest rates.
EUR/USD pair attracting some buyers near 1.0800 during early Asian trading hours on Monday. Despite the lack of headline data released in the US last week, many Federal Reserve (Fed) and European Central Bank (ECB) policymakers will provide insight into the interest rate outlook later this week. This week's headlines will be US inflation and retail sales for January. At press time, the major pair is trading at 1.0795, having gained 0.07% on the day.
ECB Governing Council member Fabio Panetta said on Saturday that the moment when the central bank will cut interest rates is fast approaching and early and gradual steps could help ease volatility in financial markets and the economy. Meantime, ECB politician Mario Centeno said he would like to see interest rates fall gradually and smoothly, rather than falling faster. Market expectations for the first cut have shifted to June from the previous April, with investors pricing in 125 basis points (bps) of total easing over the next 12 months, up from 150 bps at the start of the month.
Across the pond, Tuesday's inflation data will take center stage. Overall CPI is forecast at 3.0% yoy vs. 3.4% in December, while the core is expected to be 3.8% y/y vs. 3.9% in December. Stronger than expected data could convince Fed delay the release cycle and that should help promote American dollar (AMERICAN DOLLAR). Several Fed officials have suggested they want more time to watch whether inflation continues to fall. Minneapolis Fed President Neel Kashkari and Boston Fed President Susan Collins agreed that the FOMC may review other economic data before cutting interest rates.
Traders will continue to monitor January CPI inflation data in the US and German and eurozone ZEW surveys on Tuesday for fresh catalytic converters. German expectations are expected at 17.5 in February versus 15.2 in January, while the current situation is estimated at -79.0 in February versus -77.3 in the previous reading.
The Fed's Bowman, Barkin and Kashkari are scheduled to speak on Monday. Goolsbee and Barr are scheduled to speak Wednesday, while Waller and Bostic will speak Thursday. Finally, Barr and Daly will speak on Friday.