In a quiet trading session given that many of the globe’s financial markets are closed today, it will likely be data which drives the currency pairs. Ahead today, markets will be anxiously awaiting release of US core inflation data, which is a key piece of information used by the Federal Reserve to determine monetary policy. The consumer sector is generally viewed as the driver of economic strength in the US, and any increase in the inflation rate would suggest that a tighter policy will still prevail. The “core” inflation excludes components deemed as volatile, i.e. energy and food prices. Along with inflation, personal spending, personal income and pending home sales data will also be released. Upbeat information will provide the US Dollar with additional support.

As reported at 11:08 am (GMT) in London, the EUR/USD was trading at $1.1166, a gain of 0.01%; the pair has ranged from $1.1154 to $1.1174, which is a very tight trading band but unsurprising given the various market closures. The USD/JPY pair was trading at 113.5440 Yen, up 0.23%; the pair has ranged from 113.3950 Yen at the low end to 113.7000 Yen at the top.

A Look Ahead toward NFP

This week, markets will still be hearing from several members of the Federal Open Market Committee, including Janet Yellen tomorrow. Their speeches, coupled with this week’s market moving economic events, could help assess the timing of the next rate hike. But the week’s main event is this Friday’s release of non-farm payroll figures. Along with price stability (i.e. inflation), the Fed’s mandate is to ensure high employment in the US. The non-farms figures will provide the last piece of the puzzle; if the data is positive and meets consensus which currently calls for 205,000 new jobs added, that would increase the likelihood of an April rate increase. Any disappointment, however, and the timing of the next hike could be pushed back yet again.