The Week Ahead – US Debt Ceiling and Central Banks in Focus

On the Macro

It’s a busy week ahead on the economic calendar. While economic indicators will influence, investors should consider central bank commentary and US debt ceiling news as recessionary jitters grow.

For the Dollar:

The NY Empire State Manufacturing Index kickstarts the week. While weak numbers will test the appetite for riskier assets, retail sales numbers will impact more this Tuesday.

On Thursday, US jobless claims and the Philly Fed Manufacturing Index will also need consideration.

While the stats will influence market risk sentiment, Fed chatter will likely have more impact as central banks grapple with sticky inflation. FOMC members Kashkari (Mon), Bostic (Mon), Barkin (Mon), Williams (Tues/Fri), and Fed Chair Powell (Fri) are on the calendar to speak.

For the EUR:

It’s a busier week for the EUR.

In the first half of the week, German wholesale inflation (Mon), Eurozone industrial production (Mon), ZEW Economic Sentiment (Tues), and Eurozone GDP (Tues) will move the dial.

However, Eurozone inflation numbers (Wed) and the ECB Economic Bulletin (Thurs) will likely have more impact.

German Producer Price Index numbers wrap things up on Friday.

Other stats include Eurozone trade data (Tues) and finalized Italian inflation numbers (Tues), which should have a limited impact on the EUR.

With a busier economic calendar, investors should also consider ECB commentary. Executive Board members Andrea Enria (Mon), Luis de Guindos (Tues/Wed/Thurs), Anneli Tuominen (Tues), Frank Elderson (Wed), Fabio Panetta (Wed), Isabel Schnabel (Fri) and ECB President Christine Lagarde (Tues/Thurs/Fri) are on the calendar to speak.

For the Pound:

It is another significant week ahead for the Pound. Average earnings and unemployment figures will move the dial on Tuesday. While claimant counts will draw interest, wage growth will likely be the focal point.

While economic indicators are light, Bank of England commentary will need monitoring.

BoE Chief Economist Huw Pill kicks off the week, with BoE Governor Bailey (Wed) and MPC member Haskel (Fri) also on the calendar to deliver speeches. Huw Pill will also be speaking on Thursday.

For the Loonie:

It is a busy week ahead on the economic calendar for the Loonie.

Inflation figures for April will draw interest on Tuesday. As recessionary fear grows, a pickup in inflationary pressure will question the Bank of Canada’s near-term policy plans.

On Friday, retail sales figures will also move the dial.

Other stats include housing sector data, wholesale sales, and manufacturing sales, which should have a limited impact on the BoC and the Loonie.

Out of Asia

For the Aussie Dollar:

It is a quiet week ahead for the Aussie Dollar. While economic indicators are on the light side, wage growth figures for Q1 will move the dial before the all-important employment numbers on Thursday.

On Tuesday, the RBA Meeting Minutes will need consideration. After the surprise interest rate hike, a pickup in wage growth and solid employment figures would support a hawkish policy outlook.

For the Kiwi Dollar:

For the Kiwi Dollar, it is a quiet week.

Wholesale inflation numbers will provide direction on Thursday ahead of trade data on Friday. We expect both data sets to influence.

However, the annual budget will also need consideration on Thursday.

For the Japanese Yen:

It is another relatively busy week for the Japanese Yen. On Wednesday, Q1 GDP numbers will draw interest. A marked pickup in economic activity could raise bets on a shift in Bank of Japan forward guidance.

However, trade data on Thursday and inflation numbers on Friday would need to support a possible move away from ultra-loose.

Other stats include finalized industrial production (Wed) and Tertiary Industry Activity Index (Fri) numbers that should have a limited impact on the USD/JPY.

Out of China

On Tuesday, industrial production, retail sales, fixed asset investment, and unemployment numbers will influence market risk sentiment.

Economic indicators from China have flashed red in recent weeks. Weak consumption and industrial production numbers would fuel recessionary jitters.