US producer and consumer price trends will influence the Fed rate path and market risk sentiment.
Australian wage growth and unemployment numbers may raise investor expectations of an RBA rate cut.
The Chinese economy will be in the spotlight as recent stats signal an improving demand environment.
Australia’s Labour Report Out This Week
The quarterly wage price index for the first quarter of 2024 could show a slight decline in sequential growth (0.8% quarter-on-quarter from 0.9% in the fourth quarter of 2023), as hinted at in the Reserve Bank of Australia’s recent statement. This noted that wage growth had peaked. But the annual rate of wage growth could still tick higher as first quarter growth rate in 2023 was quite weak. We look for the annual growth rate to rise to 4.3% YoY from 4.2%. April labour data will also be published. This is volatile data and even the trend is hard to fathom. Any substantial deviation from the median forecast could be leapt upon by traders looking for direction after the latest “anything is possible” RBA statement.
Japan’s GDP Report
This year’s first quarter GDP should be the highlight of the week. It is expected to contract 0.2% QoQ seasonally adjusted mainly due to the production disruption in January and February as a result of the safety scandal. Monthly data showed a gradual normalisation from March, but overall, the interruption is likely to distort not only production but also investment. Private consumption should improve on the back of better goods and services spending.
China’s Inflation and Central Bank Meeting
The week ahead features many of the major data releases for China.
China’s major economic activity releases will be out next Friday (May 17), where industrial production, retail sales, and fixed asset investment are all expected to see a small increase in YoY growth in April. Markets will be watching the housing price data release closely, and given recent growing optimism, we could see a bottoming out of property prices in tier one and two cities. We expect that second quarter economic growth should remain above target, buoyed by a favourable base effect and policy rollout.
The People’s Bank of China’s medium-term lending facility rate decision is also due next Wednesday (May 15). We are looking for no change in the rate this month.
The US Dollar This Week
On Monday (May 13), US consumer inflation expectation numbers warrant investor attention. Upward trends in inflation expectations could influence the Fed rate path.
However, producer and consumer inflation numbers will have more impact on investor sentiment toward the Fed rate path. The numbers are out on Tuesday (May 14) and Wednesday (May 15). Hotter-than-expected numbers could fuel investor bets on Fed rate hike.
Retail sales figures on Wednesday also warrant consideration. Upward trends in consumer spending would fuel demand-driven inflation and pressure the Fed into a more hawkish Fed rate path.
Jobless claims figures will draw investor interest on Thursday (May 16). Another spike in jobless claims could temper investor fears of a more hawkish Fed interest rate trajectory.
With inflation, retail sales, and the US labor market in focus, investors should monitor FOMC member chatter. Views on inflation and monetary policy could move the dial.
Fed Chair Powell is on the calendar to speak on Tuesday (May 14).
The Pound & The BoE This Week
The UK Labour Market Overview Report will influence buyer appetite for the Pound. Weaker-than-expected wage growth numbers and a higher unemployment rate may fuel expectations of a June BoE rate cut.
After the BoE monetary policy decision (May 9), investors should consider BoE commentary. BoE Chief Economist Huw Pill (Tues) and Monetary Policy Committee Members Megan Greene (Thurs) and Catherine Mann (Fri) are on the calendar to speak.
Reactions to the labor market data and views on the timeline for a BoE rate cut would move the dial.
The Kiwi Dollar & Expected Inflation Numbers
On Monday, inflation expectation numbers will put the investor focus on the NZD/USD and the RBNZ. Hotter-than-expected inflation numbers could influence the RBNZ rate path.
Electronic card retail sales figures for April will warrant investor attention on Tuesday. A pickup in consumer spending would fuel demand-driven inflation.
Have your trading charts ready this week!
This Week’s High Impact Events
The times below are GMT +3.
Monday 13th May
06.00 – New Zealand – Inflation Expectations q/q
Potential instruments to Trade: NZD Crosses.
Tuesday 14th May
09.00 – UK – Claimant Count Change
Potential instruments to Trade: GBP Crosses.
15.30 – US – Core PPI m/m, PPI m/m
Potential instruments to Trade: USD Crosses.
17.00 – US – Fed Chair Powell Speaks
Potential instruments to Trade: USD Crosses.
Wednesday 15th May
04.30 – Australia – Wage Price Index q/q
Potential instruments to Trade: AUD Crosses.
15.30 – US – Core CPI m/m, Core Retail Sales m/m, CPI m/m, Empire State Manufacturing Index, Retail Sales m/m
Potential instruments to Trade: USD Crosses.
Thursday 16th May
04.30 – Australia – Employment Change, Unemployment Rate
Potential instruments to Trade: AUD Crosses.
15.30 – US – Unemployment Claims
Potential instruments to Trade: USD Crosses.
Friday 17th May
No High Impact Events
If you have any questions or require any assistance, please contact one of our support team members via our Live Chat or email [email protected].
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