With US data continuing to disappoint, the minutes of the April FOMC meeting (Wed) will be scoured for signs of dispersion in individual policymakers' forward-looking assessments. But with the Committee as a whole in data-dependent mode, a strong steer on Fed liftoff timing seems unlikely to be forthcoming.
One notable source of improvement in the external backdrop is the easing in the dollar effective exchange rate,by over 6% since its peak in mid-March. This fading of the dollar's recent strength should help limit falls in import prices in the months to come, and their drag on overall inflation.
"Here, CPI data (Fri) are expected to show a slight easing of the annual headline rate to -0.2% in April, despite firmer oil prices, as well as a slowing in the 'core' rate to 1.7%. While such readings will not give the Fed the confidence they need to move towards tightening policy, official anxieties that the US is entering a deflationary spiral likewise remain limited." said Lloyds Bank
