| Monetary policies will continue to be watched very closely in the short-term given the dominant influence on currency flows. In particular, the Federal Reserve stance will be crucial with a further debate over the possibility of a June interest rate increase and whether some recent fragile data has been influenced by adverse weather conditions. Risk conditions are liable to remain slightly more fragile in the short-term as Middle East tensions and Greek uncertainties persist. Key events for the forthcoming week | Date | Time (GMT) | Data release/event | | Tuesday March 31st | 08.30 | UK current account | | Tuesday March 31st | 09.00 | Euro-zone consumer prices | | Wednesday April 1st | 14.00 | US ISM manufacturing | | Friday April 3rd | 12.30 | US employment report | Dollar: US economic indicators have remained slightly disappointing, especially for investment, but there will be uncertainty over the impact of recent adverse weather and potential for significant rebound during Spring. The Federal Reserve want to start the process of interest-rate normalisation while still being uneasy over throttling the economy, especially with reported inflation still low. Nevertheless, the most likely outcome is that the Fed will raise rates within the next few months with June still a possibility if the labour market continues to strengthen. Overall, global divergence should continue to support the US currency with only limited corrections. The dollar remained vulnerable to corrective pressures for much of the week, but did find support at lower levels and strengthened significantly later in the week. Domestically, there was a much higher than expected reading for US new-home sales at an annual rate of 539,000 from a revised 500,000 previously as changeable weather conditions continued to have an important distorting impact. There were higher than expected readings for the manufacturing PMI index and house prices. Principal attention focussed on the inflation data with headline consumer prices matching consensus forecasts with a 0.2% monthly gain. The core reading was slightly higher than expected at 0.2% with an annual 1.7% increase which should ease Fed concerns over disinflationary pressures. Durable goods orders data was weaker than expected with a 1.4% decline for February compared with expectations of a slight increase while there was also a drop in core orders and this was the sixth consecutive month that underlying orders have been weaker than expected. Fed vice-chair Fischer stated that interest rates were likely to increase this year with the timing dependent on data releases. There were hints that there will be a June tightening if there is another strong employment report in April while disappointing data will trigger a delay. Fischer was keen to insist that monetary policy would stay very accommodative even when rates are increased and that there is no pre-determined plan for a sequence of rate hikes Chicago Fed President Evans, maintained a very dovish tone with comments that rates could go below zero. Atlanta head Lockhart maintained a balanced outlook, but suggested that the Fed would be very reluctant to delay a rate increase beyond September unless there were serious concerns surrounding the outlook Latest jobless claims data was better than expected with a decline to 282,000 in the latest week from 291,000 previously. There was also an improvement in the Markit PMI services-sector index to 58.6 from 57.1, the strongest rate of increase since September 2014 with robust readings for employment which helped underpin confidence in the US outlook, increasing speculation that recent weakness was influenced by adverse weather conditions. | 
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