The Week Ahead – EU Elections, Stats, Monetary Policy and Trade in Focus

On the Macro

For the Dollar:

It’s a relatively quiet week ahead for the Greenback, from an economic data perspective.

Key stats through the week are limited to April existing home sales and new home sales figures due out on Tuesday and Thursday respectively.

Alongside the Thursday numbers, prelim May private-sector PMI and the weekly jobless claims figures are also due out.

At the end of the week, April durable goods orders will also be in focus.

On the data front, core durable goods orders and service sector PMI numbers will have the greatest influence.

Outside of the stats, FED Chair Powell is due to speak on Monday, ahead of a number of FOMC members who are due to speak through the week. While the FOMC meeting minutes are also due out on Wednesday, trade war chatter may well continue to be the main area of focus.

The Dollar Spot Index ended the week up 0.68% to $97.995.

For the EUR:

It’s a particularly busy week ahead. Germany wholesale inflation and Eurozone consumer confidence numbers are due out in the early part of the week.

Expect the EUR to be particularly sensitive to consumer confidence numbers.

A data deluge on Thursday will be key in the week. Finalized German GDP numbers, prelim May private-sector PMI numbers and German business sentiment figures are due out.

We will expect the focus to be on Germany’s GDP, manufacturing and business climate index figures.

Outside of the stats, ECB President Draghi speaks on Tuesday ahead of the ECB monetary policy meeting minutes due out on Thursday.

The EUR/USD ended the week down 0.67% to $1.1158.

For the Pound:

It’s a busier week ahead. May industrial trend orders and April inflation and retail sales figures are due out.

April’s inflation figures, due out on Wednesday, will be the key driver in the week.

April retail sales figures will also garner some attention at the end of the week. The numbers may reveal whether March’s strong figures were, in fact, as a result of hoarding.

Outside of the numbers, the BoE Inflation Report Hearings on Tuesday will draw attention at the start of the week.

Brexit and the EU elections will be the key driver on the week, however. There’ll be plenty of action on the political front. The EU elections on Thursday and Brexit chatter from Parliament will drive the Pound.

The GBP/USD ended the week down 2.11% to $1.2724.

For the Loonie:

It’s another relatively quiet week ahead. March retail sales figures are due out on Wednesday ahead of Wholesale sales figures on Thursday.

The focus will be on the March retail sales figures that are forecasted to be Loonie negative.

Outside of the stats, U.S – China trade war chatter will remain in focus. Sentiment towards the global economy will impact crude oil prices and the Loonie.

The Loonie ended the week down 0.31% to C$1.3458 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week ahead. 1^st quarter construction work numbers due out on Wednesday. are unlikely to influence.

Outside of the numbers, the RBA will release its monetary policy meeting minutes on Tuesday and RBA Governor Lowe will speak later in the morning.

Assuming the minutes provide few surprises, trade war chatter and market reaction to the weekend federal election will likely be the key driver.

Federal elections delivered a shock result that should provide the Aussie Dollar with early support.

The Aussie Dollar ended the week down 1.91% to $0.6868.

For the Japanese Yen:

It’s a busier week ahead. 1^st quarter GDP and March industrial production figures due out on Monday.

Later in the week, the focus will shift to trade data and machinery orders on Wednesday and inflation figures due out on Friday.

We can expect the stats to influence, with the Japanese economy forecasted to contract in the 1^st quarter.

Support for the Yen could come from a deterioration in market risk appetite, however. Any chatter from Beijing or Washington will overshadow the stats in the week.

The Japanese Yen ended the week down 0.12% to ¥110.08 against the U.S Dollar.

For the Kiwi Dollar:

1^st quarter retail sales figures are due out on Wednesday ahead of April trade data due out on Friday.

Following last week’s tumble, weak numbers would raise the stakes of an RBNZ rate cut in the coming months. The Kiwi could find itself at $0.64 levels, particularly of trade war rhetoric continues.

The Kiwi Dollar ended the week down 1.18% to $0.6519.

Out of China:

There are no material stats due out. The focus will remain on trade in the week. There could be some market relief should Beijing roll out measures to support the economy.

Geo-Politics

U.S – China Trade War:  Will there be a softer stance by the U.S or will China make another retaliatory move at the start of the week. The trade war and outlook remain the key focal points for the markets.

Brexit: Weeks of cross-party talks failed to deliver. As time runs out for Theresa May, Parliament could be in action again this week. Indicative votes may well leave the Pound on the back foot once more.

EU Elections: Nigel Farage and the Brexit Party look set to raid Brussels. Is this the beginning of the end of mainstream UK politics? It’s not just the Tories that need to worry. Projections point to a surge in support for populist and right-wing parties from across the EU.