Bank of England member Gertjan Vlieghe added fuel to the fire that a further slowdown could be imminent on Monday evening by saying he thought the recent deceleration in UK consumption growth could continue. Vlieghe claimed that a premature interest rate hike would be a bigger mistake than a later one, suggesting he is some way off joining Bank of England hawks Ian McCafferty and Michael Saunders in voting for an immediate interest rate increase.

We now look ahead to this morning’s services PMI as potentially the most volatile data release on the economic calendar in the UK this week, given Britain’s heavy dependence on the sector for overall economic growth. The index is expected to show a modest slowdown to 53.5 from the 53.8 recorded in May. On a similar note, we’ll also have the latest composite PMI and May retail sales in the Eurozone this morning.

RBA, Riksbank keep interest rates unchanged

With little in the way of market moving news out of the major G3 economies, announcements from two of the world’s major central bank’s dominated the headlines on Tuesday. The Reserve Bank of Australia sent the Aussie Dollar around one percent lower for the day after it defied expectations that it would take on a more hawkish shift at its monetary policy meeting. The RBA kept its policy steady and maintained its relatively neutral stance, although it did at least drop its signal that rates were unlikely to increase any time soon.

Sweden’s central bank, the Riksbank, meanwhile caused somewhat of a stir by again failing to rule out further cuts in its borrowing rate, perhaps awaiting the next move from the ECB before committing to tighter policy. The ECB’s chief economist Peter Praet unsurprisingly maintained a fairly cautious tone during his speech yesterday. Praet urged patience on the central bank’s stimulus programme, claiming that anchoring interest rate expectations was the key condition for QE to deliver accommodative policy. However, markets paid little attention and the Euro ended more or less unchanged against the Dollar for the day.

Calm before FOMC storm as central bank releases meeting minutes

With the US workforce off on Tuesday due to Independence Day currency markets were, on the whole, relatively quiet yesterday and the Dollar index was barely changed for the day.

Investors around the world instead had one eye on this evening’s June meeting minutes from the Federal Reserve, in which the FOMC hiked interest rates again for only the fourth time in a decade. The minutes themselves are likely to maintain the central bank’s relatively hawkish tone, with any rhetoric regarding growing confidence that inflation will move higher in the coming months likely to provide decent support for the Dollar this evening.