The markets focus for the start of this week will be on the fresh UK, EU data and Fed Speakers in May. This weekly market focus is provided by the Head of Research at ADS Securities, Konstantinos Anthis.
14 May, ADS Securities – The first 24 hours of trading are virtually empty of any new reports from either side of the Atlantic but Fed President Mester and Bullard’s speeches in France and New York respectively will be closely monitored for policy clues. There has been a lot of speculation on how the downtick in inflation will affect the US central banks’ tightening path and traders are eager for any hints from the two policymakers.
Our view is that the recent pullback in the Consumer Price Index report should have very little effect on the Fed policy for the months to come. Two additional rate hikes this year – one next month and one sometime after the end of the summer – are almost guaranteed so the debate is only valid regarding a third rate increase later in 2018. As we discussed last week, there’s plenty of time to plan for this so we believe that the Fed speakers will not deviate from their moderately bullish tone which will in turn bring the US Retail Sales report to the fore.
US consumer spending figures forecast
The US consumer spending figures are due to come in tomorrow and with inflation ticking a bit lower last month investors and analysts are keen to see how the retail sales data prints. Expectations for tomorrow’s report are mixed with the month-on-month reading predicted to come in lower but the data excluding spending on automobiles will likely beat so there’s room for a surprise on either side. In any case, a broadly positive report will soothe the market jitters keeping the dollar afloat but a miss will clearly spread more nervousness among investors and force the dollar lower.
Eurozone GDP and ZEW Survey reports
At the same time, the Eurozone GDP and ZEW Survey reports are pending for release Tuesday morning while just a bit earlier the UK employment figures will also come in. With the euro and the pound having gained during the past 2-3 days on the back of dollar’s pullback tomorrow’s fresh data will be critical in extending these rallies or putting a stop to them. Business sentiment in Europe and wage growth in the UK will be the primary focus among the fresh data but we will spend more time discussing them in detail tomorrow morning.
Equities in Asia are trading higher at the beginning of the week painting a bullish outlook for the sessions ahead. With recent data from the US and the UK suggesting that central banks around the world will likely struggle to grow even more aggressive any time soon equity traders are loading their long positions once again. Furthermore, US Treasury yields continue to indicate some weakness for the past few days so it looks like all things point higher for the European and US stock markets today.
ADS Securities Risk Disclaimer
This article was provided by analysts of ADS Securities.
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