The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is getting ready for one the most important phone calls in nearly a decade history while the biggest central bank is considering its next steps in monetary policy this week. At the time of writing on Monday, the DXY index edges lower and trades near 103.40 after the United States (US) Retail Sales data release for February.
On the geopolitical front, a high-stakes meeting between US President Donald Trump and Russian President Vladimir Putin is scheduled on Tuesday, with the two parties to discuss territory and to divide up certain assets, according to President Trump on Sunday at Airforce One, Bloomberg reported.
The second big development is in German politics, with a vote on a €1 trillion spending package on Tuesday to boost Europe's weapon industry, which would spill over into the whole European industry. If an agreement and backing can be reached with the Greens, a two-thirds majority would be present to get the plan through the German Bundestag.
On the economic data front, all eyes will be on the Federal Reserve (Fed) and the Federal Open Market Committee (FOMC) on Wednesday, where every voting Fed member will be penciling in their projection of where the central bank's policy rate will be in the near and medium term. Ahead of the Fed's rate decision and Fed Chairman Jerome Powell's speech, US Retail Sales for February saw a dreadful revision while current Retail Sales fell flat.
Headline pressure as of Tuesday
President Trump said he will speak with Russian President Vladimir Putin on Tuesday as the US presses for an end to fighting in Ukraine, Bloomberg reports. On Sunday, during a flight on Air Force One, President Trump confirmed that the discussion will be about territory and dividing up certain assets, and that there is "a very good chance" for a deal.
At 12:30 GMT, US Retail Sales for February came out:
The monthly figure came in at 0.2%, missing the 0.7% expected, from the previous 1.2% contraction in January (downwardly revised from -0.9%).
The yearly number came in 3.1% against the previous 3.9% (downwardly revised from 4.2%).
At the same time, the NY Empire State Manufacturing Index for March took a beating, contracting by 20, missing the small 1.9 contraction expected, coming from a positive 5.7 in February.
Equities holding on to cautious gains this Monday while the European equities are outperforming US ones.
The CME Fedwatch Tool sees a 99.0% chance for no interest rate changes in the upcoming Fed meeting on Wednesday. The chances of a rate cut at the May 7 meeting currently stand at 27.5%.
The US 10-year yield trades around 4.28%, off its near five-month low of 4.10% printed on March 4.
Source: Fxstreet
