EUR/USD – Euro Resumes Slide, Markets Eye Fed Rate Statement

EUR/USD has posted considerable losses on Tuesday, erasing the gains which marked the Monday session. The pair is trading slightly above the 1.12 level. On the release front, Eurozone Employment Change Industrial Production. Both indicators beat their estimates. In the US, today's highlights are Core Retail Sales and Retail Sales. The estimate for both reports stands at 0.4%.
All eyes are on the Federal Reserve's policy meeting, which will conclude with a rate statement on Wednesday. The markets have written off a rate hike in June, while a July move remains unlikely, according to the CME Group. The chances of a June hike are just 1.9% compared to a 26.3% in May. The chances of a July hike is 17.9%, compared to 43.2% in May. The sharp drop in market sentiment for a rate hike can be attributed to the dismal US Nonfarm Payrolls report as well as some back pedaling by Fed over the past few weeks.

US Retail Sales Rise Again in May

In US retail sales rose by a stronger than expected 0.5% in May 2016 (compared to market expectations for a 0.3% increase) to build on a strong April gain.

Excluding the auto sector, sales rose by 0.4% with 'control' sales (retail sales ex-autos, gas stations, and building material stores) also posting a 0.4% increase that built on an outsized 1.0% jump in April.