Analysts at TD Securities note that UK’s April inflation came in a tick lower than expected, with core inflation unchanged at 1.8% y/y, while headline inflation rose to 2.1% y/y. Key Quotes “The increase in headline inflation came on the back of higher household energy prices, as the government-set price cap was raised on April 1st; this is likely to unwind in October when the cap is again reviewed (an assumption the BoE is making as well).” “The usually Easter-sensitive Package Holidays component was very weak, leading to a sharp decline in Recreation inflation. This component (which also includes the volatile Video Games category) is largely responsible for the downside miss in core this month.” “The BoE won't be too worried about today's figures in light of ongoing political uncertainty. On that front, Theresa May will take questions for up to 3 hours from MPs this afternoon.”

• Canadian retail sales come in better than expected and prompt some fresh selling. • A sharp fall in Oil prices does little to lend any support amid a modest USD pullback. • Investors now look forward to the latest FOMC policy minutes for a fresh impetus. The USD/CAD pair maintained its offered tone through the early North-American session and tumbled to four-week lows in reaction to upbeat Canadian macro data. The pair extended its recent pullback from levels just above the key 1.3500 psychological mark and finally managed to find acceptance below the 1.3400 handle, confirming a near-term bearish broke below a short-term consolidative trading range held over the past three weeks. The release of stronger than expected Canadian retail sales figures, showing a monthly growth of 1.1% in March provided a strong lift to the Canadian Dollar and turned out to be one of the key factors behind the latest leg of a sudden drop of around 30-pips in the last hour. Bearish traders further took..

The data published by Statistics Canada today revealed that retail sales in March rose by 1.1% on a monthly basis in March to beat the market expectation of 1%. Furthermore, sales excluding autos rose 1.7% to surpass the analysts' estimate of 0.9% by a wide margin. The initial market reaction allowed the loonie to gather strength and dragged the USD/CAD pair to a monthly low of 1.3360. "For the first quarter, retail sales edged up 0.1% following a 0.5% decrease in the fourth quarter. In volume terms, retail sales edged down 0.1% in the first quarter," the publication read.

EUR/USD gathers momentum and tests 1.1170, daily peaks. The greenback comes under pressure, probes sub-98.00 zone. Attention shifts to the FOMC minutes later in the day. EUR/USD is prolonging the choppy trade so far this week, always navigating the lower bound of the recent range in the mid-1.1100s. EUR/USD now focused on FOMC Spot remains under pressure so far this week, although sellers have not quite succeeded in dragging it further south of weekly lows near 1.1140 recorded yesterday. The likelihood of another visit to YTD lows in the 1.1100 neighbourhood, however, stays well on the cards against the current fragile backdrop. In the meantime, US-China trade effervescence and the recent announcement regarding Chinese smartphone maker Huawei appears to have lent some support to the riskier assets. Later in the day, all the attention will be on the release of the FOMC minutes and particularly on the Committee’s views on the health of the US economy and the absence of upside trac..

While responding to questions in the House of Commons, British Prime Minister Theresa May announced that the Withdrawal Agreement Bill will be published on Friday and said that the vote will take place after parliament recess. "The opportunity of Brexit is too large and the consequences of failure are too grave to risk delay," May added.

• The British Pound continues to slide in the aftermath of May's new Brexit plan. • Reports suggest Cabinet ministers might force May out of the office early next week. • Subdued USD demand/oversold conditions do little to ease the bearish pressure. The bearish pressure surrounding the British Pound remains unabated, with the GBP/USD pair sliding below mid-1.2600s, or fresh multi-month lows in the last hour. The pair continued losing ground through the mid-European session on Wednesday and added to its recent heavy losses recorded over the past two weeks or so, from the vicinity of the 1.3200 handle touched earlier this month. The fact that investors remain convinced that the UK PM Theresa May's new Brexit proposal might struggle to gather enough support from British MPs continued denting the already weaker sentiment around the Sterling. Adding to this, Cabinet ministers were reported saying that they cannot vote for May's Brexit deal and push to force her out of of..

Rebound seen in the US T-bond yields boosts USD/JPY this week. US Dollar Index continues to move sideways near 98. FOMC is expected to reiterate its patient stance in May meeting minutes. Supported by the strong rally witnessed in the major equity indexes and the ongoing recovery in the 10-year US Treasury bond yield on Tuesday, the USD/JPY pair climbed to its highest level in two weeks at 110.67. However, with the trading action in the FX space turning subdued ahead of the key FOMC event later today, the pair has struggled to build on its latest upsurge and gone into a consolidation stage below mid-110s. As of writing, the pair was down 0.12% on a daily basis at 110.37. Earlier in the Asian session, the data published from Japan showed that machinery orders increased by 3.8% on a monthly basis in March to beat the market expectation for a decline of 0.7% by a wide margin but didn't receive a significant reaction from the market. Later today, the FOMC will release the minutes..

Analysts at ABN AMRO point out that Belgium will go to the polls on Sunday 26 May and the polls show that the parties that were in the previous coalition government have each lost support, while far-right, far-left and green parties have gained, so the political landscape has become even more fragmented than it already was. Key Quotes “Similar to the results of the previous two elections, the Flemish-nationalist conservative N-VA is expected to become the biggest individual party, while the Walloon social-democrat PS will become second.” “Formation of a new government could (again) be complicated and might take considerable time as a majority coalition might need as much as five or six individual parties. We think it is most likely that N-VA will fail to form a government and that ultimately a Purple-Green coalition (of centre-left, centre-right and Green parties) will take office.” “Under all likely coalitions, Belgium’s public finances would likely deteriorate modestly compared t..

Analysts at TD Securities suggest that Canadian retail sales are expected to see a large increase (TD: 1.4%, consensus: 1.2%) in March due to a combination of strong motor vehicle sales and a sharp increase in gasoline prices. Key Quotes “The latter should help to support ex. auto sales, where TD looks for a 1.3% advance. Meanwhile, volumes should underperform the nominal series with a 0.8% advance which would leave them little changed for Q1 as a whole.”