nvestors have continued to ramp up bets that the Bank of England would raise interest rates again at its next monetary policy meeting in May. Signs that UK house price growth picked up pace in March further supported that view yesterday, with data from Halifax suggesting that house prices grew by 1.5% last month, its largest increase in six months. This gives an unexpected boost to the sector that had struggled through months of lacklustre growth and contributed to financial markets doubling down on the prospect of higher rates next month.

MPC member Ian McCafferty also spoke hawkishly, saying that the UK should not delay raising rates following a strong pick-up in the global economy. Overnight Index Swaps (OIS) are now placing a near certain 90% chance of a rate increase from the BoE when it meets in May.

In the US, concerns surrounding Donald Trump’s proposed protectionist policies appeared to re-emerge on Monday. Most investors have been largely unfazed by the prospect of a trade war between the world’s largest economy and China in recent days. Market jitters have, it appears, seemingly returned this week, with the Dollar slipping to a six day low in a session void of any other major domestic economic data.

The greenback could take its cue from the latest set of producer price index data this afternoon. In the absence of any major surprises here, tomorrow’s inflation data and Federal Reserve meeting minutes could hold the key for the currency this week. Inflation is expected to show a modest acceleration on February’s data, while the FOMC minutes could give us more hints on how policymakers in the US expect the rate path to look in 2018.

Russian Ruble has worst day in two years on US sanctions

The biggest news story in the currency markets yesterday was undoubtedly the collapse in the Russian Ruble, which experienced its worst day of trading since 2016. The currency sold-off by almost 4% during the London session, while the Russian stock market shed over 10% of its value as investors reacted to a new round of sanctions from the US. These sanctions, which were announced late on Friday, target a total of 24 Russian officials in an aggressive move aimed at punishing Moscow for its alleged meddling in the US Presidential Election in 2016.

Meanwhile, economic news out of the Eurozone was fairly disappointing, although the Euro mostly overlooked it. The Sentix investor confidence index dipped to 19.6 from 24.0, while Germany’s trade balance undershot expectations following a sharp drop off in exports.