terling, Euro and the Dollar all ended very close to where they began the week and, other than a modest rally in the Canadian Dollar, there was little action in G10 currency trading. Things were more lively in emerging markets, where the Brazilian real, Turkish lira and South African rand all lost ground. The real was the biggest loser of the week, as investors were rattled by the arrest of Lula, which is by far the most popular contender for the upcoming presidential elections.

This week is thin in terms of macroeconomic data or policy news. We may see some volatility around the release of the FOMC minutes on Wednesday and the ECB minutes for its March meeting on Thursday. Much more important, however, is the US inflation report for March out on Wednesday afternoon.

Major currencies in detail

GBP

Weakish PMI business surveys last week were blamed on the exceptionally cold weather in March, so Sterling was able to largely ignore them and end the week higher, particularly against the Euro.

Economic data is relatively light this week baring industrial and manufacturing production numbers on Wednesday, and no significant news on Brexit are expected. The Pound should therefore take its lead from events elsewhere.

EUR

Eurozone inflation increased to 1.4% annualised in March on the back of higher energy prices. However, the more relevant core number that excludes volatile components remained stuck at 1% for the third consecutive month, far below the ECB target of close to, but below 2.0%. The Euro dropped modestly on the news, and even the soft US payrolls report was not enough to bring it back to where it started the week.

With a light data calendar on tap this week we do not expect the common currency to test its recent range of 1.21 to 1.25.

USD

At first sight, the March employment report was soft. However, it was probably mostly statistical pay back for the very strong data of the prior month. Over the entire first quarter of 2018, the US has generated just north of 200,000 jobs per month, slightly higher than in 2017 and continuing to take slack out of the US labour market. Earning growth ticked up to 2.7%. The market largely saw through the weakness in the headline, and the Dollar didn’t budge.

Key data for this week includes the inflation report for March, to be released Wednesday, as will the minutes from the last meeting of the Federal Reserve. As for the former, an uptick in core inflation should be supportive for the greenback.