Macro data out this week will provide a clearer picture of how country-specific and global economic activity transpired in April and to a lesser extent in May following signs that growth momentum slowed slightly in Q1. Markets will accordingly take their cue on how this is likely to impact major central banks’ monetary policy settings in coming weeks after a week during which most currencies have traded sideways.
Monday 14th May
United States: FOMC members Mester and Bullard speak. Recent US macro data has pointied to slowing growth momentum albeit from high levels and only a slow rise in inflation which in turn suggests that the Federal Reserve may only hike rates twice more this year. Markets will be looking for signs that FOMC members are increasingly sharing this view.
Tuesday 15th May
Australia: Minutes of the Reserve Bank of Australia’s May policy meeting are likely to confirm that the RBA is in no rush to even contemplate an interest rate hike.
Germany: Q1 GDP. Germany remains the Eurozone’s powerhouse but business confidence and growth in output and exports have collapsed in recent months while Eurozone GDP growth slowed to 0.4% qoq in Q1 from 0.7% qoq in Q4 2017. This is likely to be reflected in a non-negligible slowdown in German GDP growth in Q1, with analysts forecasting a similar slowdown to 0.4% qoq from 0.6% qoq. These backward looking data should not come as big surprise to markets but may be sufficient to further put the brakes on any material Euro appreciation.
United Kingdom: March labour market data. This will be first major data release since the Bank of England’s decision last Thursday to leave its policy rate on hold at 0.50% and is particularly important given that Governor Carney flagged weak real wages as an underlying cause behind soft UK economic growth. So while the unemployment rate likely remained at or near its multi-decade low of 4.2% in March, markets will be looking for signs – however tentative – that real wages may have bottomed out which would in turn at least give a modicum of credibility to Carney’s view that a rate hike this year is still on the cards.
Germany: May ZEW economic sentiment index. In a sense this release is perhaps more important than the Q1 GDP data as they will provide a first glimpse of German business confidence in May. The index fell sharply in March and again in April to -8.2 from a steady and robust +18 in the previous three months. A further fall in May is feasible.
United States: April retail sales. Data so far released suggest that momentum in US economic growth slowed in early Q2 and analysts forecast that retail sales growth halved to 0.3% mom in April from 0.6% mom in March. If correct these numbers may not cause a broad Dollar sell-off but could be sufficient to take the wind out of the Dollar’s sails.
Wednesday 16th May
Japan: Q1 GDP. This data release in the world’s third largest economy will help complete the picture for global GDP growth in Q1 with analysts forecasting that Japanese GDP growth halved to 0.2% qoq in Q1.
United States: April housing data, including building permits and housing starts. US housing market has proved robust and is not a worry for the Federal Reserve but has a non-negligible, albeit indirect impact on US consumer confidence.
United States: April industrial output.
Switzerland: Swiss National Bank Chairman Thomas Jordan speaks. The Swiss Franc has stabilised in recent weeks and Jordan may provide some colour on the SNB’s thinking on the outlook for the currency and economy.
Thursday 17th May
Australia: April labour data. Like in the US and UK the Australian labour market has been robust even if employment growth has slowed sharply in recent months but the focus for markets and the RBA will be the extent to which a tight labour market starts feeding through to wage inflation and in turn consumption and inflation.
Friday 18h May
United States: FOMC members Mester speaks
