Forexlive European FX news wrap: Slow session as we await the US PCE release

• The Fed's preferred inflation measure is expected to show another improvement in April
• Italy April PPI +2.6% vs +3.9% y/y prior
• Italy May preliminary CPI (HICP) +1.9% vs +1.9% y/y expected
• ECB's Panetta: Reduced room to cut rates further, but macro outlook remains weak
• Italy Q1 final GDP +0.3% vs 0.3% q/q prelim
• Eurozone April M3 money supply +3.9% vs +3.7% y/y expected
• Bavaria April CPI +2.1% vs +2.1% y/y prior
• Switzerland May KOF leading indicator index 98.5 vs 98.4 expected
• Spain May Flash CPI (HICP) Y/Y +1.9% vs +2.0% expected
• Germany April retail sales -1.1% vs 0.2% m/m expected
• BoE’s Taylor: Higher inflation not coming from demand and supply pressures

It's been a slow session as we just got a couple of low tier data releases and very limited newsflow. The inflation readings from Spain, Italy and Germany showed some more progress on inflation but nothing notable. The data won't change the ECB plan of cutting rates in June.

Nonetheless, the ECB members are starting to look for a pause after the June's reduction. Today, ECB's Panetta, who is a dove, sounded more neutral as he said that there's now reduced room to cut rates further given that they are now in their estimated range of neutral rates (1.75%-2.25%).

In the American session, we get the US PCE price index data, which is the Fed's preferred inflation measure, the Canadian GDP report and the final UMich consumer sentiment. Neither of those should change much in terms of interest rates expectations, but always watch out in case we get notable deviations from the expected numbers.