After a relatively quiet previous week with not much market-moving news, participants brace for a data-heavy week ahead. The releases of key indicators such as consumer price indexes, retail sales, and GDP figures will significantly impact expectations around central banks’ next policy moves in their fight against inflation. Markets are closely watching for any hints of potential monetary policy easing, especially from the US Federal Reserve.
Meanwhile, heightened geopolitical tensions in the Middle East are underpinning demand for safe-haven assets like gold. With a flurry of high-impact economic data on the horizon, this week promises to be an eventful one for financial markets.
🇬🇧 Claimant Count Change — May 14, at 09:00 GMT+3
The upcoming week kicks off with the UK Claimant Count Change release, a key economic indicator that measures the monthly change in the number of people claiming unemployment-related benefits. This data point is closely watched by investors and traders as it provides insights into the health of the UK labor market and the overall economic landscape.
The forecast for the upcoming release stands at 8.3K, lower than the previous reading of 10.9K. A lower-than-expected figure could be seen as positive for the British Pound ($GBPUSD), as it may suggest improving employment conditions and a more robust economy. However, the impact on the currency pair and the $FTSE100 index will also be influenced by the broader market sentiment, especially given the recent struggles of the Pound Sterling amid concerns over potential Bank of England interest rate cuts.
🇪🇺 GDP q/q — May 15, at 12:00 GMT+3
The next major economic release is the Eurozone’s Gross Domestic Product (GDP) data for the previous quarter. Quarterly GDP figures have been hovering around zero growth, similar to the previous release. This stagnation in economic output suggests a weak and sluggish recovery in the Eurozone economy, which can potentially weigh on the Euro currency against its major counterparts, particularly the EUR/USD pair.
Notably, the EUR/USD exchange rate has recently breached the $1.0800 level and is eyeing the 1.1000-1.1100 target range. The strength of the Euro against the US Dollar is significant as substantial deviations from the expected GDP data could trigger volatility in this heavily traded currency pair. Furthermore, the release may also impact the performance of the DAX 30 index, which tracks some of the largest and most influential German companies.
🇺🇸 Retail Sales m/m — May 15, at 15:30 GMT+3
On the same day as the Eurozone GDP release, the United States will publish its monthly Retail Sales figures. This data point holds significant importance as it provides a measure of consumer spending, which accounts for a substantial portion of the US economic activity. The release’s impact will likely be felt across multiple asset classes, including currencies, commodities, and stocks.
The US Dollar could experience heightened volatility following the Retail Sales report, as stronger-than-expected numbers may bolster the greenback’s appeal.
Conversely, a weaker reading could undermine the currency’s strength. Meanwhile, gold prices have been on an upward trajectory, currently trading near the $2,360 level during early Asian trading hours. Rising geopolitical tensions in the Middle East have fueled safe-haven demand, benefiting precious metals.
Major US equity indices, such as the Dow Jones, Nasdaq, and S&P 500, may also react to the Retail Sales data, as robust consumer spending supports corporate earnings and economic growth prospects. However, the forecast for the upcoming release is relatively subdued, with an expected growth rate of around 0.1%, lower than the previous month’s 0.7% increase.
🇺🇸 CPI m/m — May 15, at 15:30 GMT+3
On the same day, the United States will release the Consumer Price Index (CPI) data for April, a closely watched inflation gauge. The forecast suggests a slowdown in the monthly CPI figure, with expectations of a 0.2% increase, lower than the previous month’s 0.4% reading.
This deceleration in inflationary pressures could influence the Federal Reserve’s monetary policy stance and potentially accelerate the pace of interest rate cuts. Currently, the Fed’s benchmark rate stands at 5.50%, and a softer CPI print might bolster the case for more aggressive rate reductions to support economic growth.
🇪🇺 CPI m/m — May 17, at 12:00 GMT+3
The active economic week will conclude with the release of the Eurozone’s Consumer Price Index (CPI) data for the month on Friday. Unlike the US CPI figures, the Eurozone’s monthly CPI is expected to remain unchanged at 0.6%. Similarly, the annual inflation rate is also forecasted to hold steady at 2.7%.
This steady inflation outlook could impact the EUR/USD currency pair, as it may influence the European Central Bank’s monetary policy decisions. If the CPI data aligns with expectations, it could reinforce the central bank’s current policy stance and provide stability to the Euro against major currencies like the US Dollar.
That’s it for this week! 👋
