• GDP for Japan and EA
• Jobs data for Aussie and UK
• Retail sales for US and Canada
Last week, the dollar index momentum eased slightly and the 10-year Treasury Yield failed to close above 3.00%.
Brent oil continues to rally as the Trump announce US withdraw from Iran nuclear deal (Tue). And as we discussed last week’s article, there is so far sufficient evidence to pause the rally at the resistance zone. We are watching particularly on monthly reports by OPEC (Mon) and the International Energy Agency (Wed).
Elsewhere, May 18th is the absolute deadline for NAFTA negotiation.
“Administration officials have told reporters they believe the deadline is May 18, but have avoided saying that publicly, because they don’t want to be tied to that date if they cannot make it” reported by Washingtonexaminer.com.
This week seems to be a quiet start week with FOMC Member Mester speaks. Things should pick up rapidly from Tuesday with China IP, moving to the European session, German Prelim GDP, UK jobs data, EA Flash GDP and US Retail sales are due.
In the mid of the week (Wednesday) Japan Q1 GDP and EA Final CPI are the key drivers.
The Mega Thursday offers CPI for China YoY and US MoM basis, BOE Monetary Policy Report, and Inflation report. Thursday Aussie jobs data are the only data available.
Finally (Friday) occupied with Canada CPI and retail sales data.
Japanese Q1 preview:
GDP data due on Wednesday, we expect a minor contraction of 0.2% annual pace.
According to Marcel Thieliant of Capital Economics “GDP growth slowed sharply last quarter and we think that the economy won’t expand as strongly this year as it did in 2017,” reported by AP NEWS.
We also expect the economic data should continue to have a limited impact on JPY.
FX reaction: USDJPY (Limited upside risk), EURJPY and GBPJPY manage to hold the parallel support.
US Core retail sales:
April Monthly retail sales are expected to gain 0.4% slightly less than March gain of 0.6,% was the first gain in four months.
FX Reaction: EURUSD (Bullish)
UK employment figures:
Market traders are closely watching the employment figures after BOE stays on hold.
At its meeting ending on 9 May 2018, the MPC voted by a majority of 7-2 to maintain Bank Rate at 0.5%. “Wage growth and domestic cost pressures are firming gradually, broadly as expected” reported in the MPC minutes report. The bank also reported, “Hiring intentions have remained strong and, over the past three months, the unemployment rate has fallen slightly further.”
We expect the unemployment rate will remain at 4.2% and the average weekly earnings are likely to rise by 2.9 y/y basis vs 2.8%. A solid report could uplift the cable’s range from the key support level.
FX reaction: GBPUSD (Bearish- Mild bullish) and EURGBP (sideways)
Aussie jobs data:
RBA minutes, Wage growth and jobs data are the catalysts for AUD. In April unemployment rate likely to remain steady at 5.5% and the economy is forecast to add 20.3K.
FX Reaction: AUDUSD(Bearish-Slight bullish) and AUDNZD (Bullish)
Chart of the week:
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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