The Economic data for this week looks quite interesting with several data coming in from the US, Japan, Europe and China.
This week the focus is on US, Eurozone and Japanese inflation numbers. The health of China’s manufacturing industry is also in the spotlight, while concerns about the demand outlook could continue to weigh on oil prices. In addition, the consumer price index of the euro area is closely monitored.
April personal consumption expenditure (PCE), the Fed’s main inflation gauge, is out and could change the central bank’s messaging.
The key economic data and events for this week
Monday – BOJ governor Ueda speaks
The Bank of Japan’s government speech will have a major impact on the yen. Policymakers are facing increasing pressure to raise interest rates due to the continued weakness of the yen, which is hurting consumption by raising the cost of importing raw materials.
Tuesday – CB US Consumer Confidence
Tuesday’s main attraction is CB Consumer Confidence Economic Data. The relationship between consumer spending and confidence has been a widely observed development over the past year. Household confidence, as measured by the Conference Board, fell for three straight months and was at its lowest level since the summer of 2022 in April.
On the same day, a speech by members of the Federal Reserve provides an overview.
Wednesday – US Inflation
The market will react on German Prelim CPI m/m. The number is foreseen underlying inflation fall 0.2% on a monthly, which would be the smallest decrease compared to 0.5% last month.
Thursday – US Weekly Jobless Claims, GDP
Markets are focused on Thursday’s preliminary US GDP q/q data. This figure is expected to be a 1.3 percent decrease from the previous 1.6 percent. The slow growth rate has a significant impact on the market. Meanwhile, the pending release of domestic sales m / m is expected to come in at 0.1%, much lower than the previous 3.4%, which could weigh on the dollar.
US jobless announcements are concentrated on the same day. The data should be 218,000 compared to 215,000 before. This could have an impact on the dollar.
Friday – China PMI, US PCE, Eurozone Inflation
Friday is a crucial day of the week, with China’s PMI, Japan’s inflation and the US’s Personal Consumption Expenditure (PCE) price index being looked at for indications of the direction of interest rates for the rest of the year.
Tokyo Core CPI y/y is expected to be 1.9% from 1.6% previously. This could have a negative impact on the yen. The figures come two weeks before the BOJ’s next monetary policy meeting, where some believe the central bank could raise interest rates for the second time since the historic move in March. of.
On the same day, the Ministry of Finance is to release intervention data which covers the recent rounds of suspected intervention and the BOJ’s bond buying schedule, where traders will look out for cuts in the amount of central bank purchasing.
Further, China is to release its official manufacturing and non-manufacturing PMIs. Economists are expecting the manufacturing index to remain at 50.4, unchanged from the previous month, that separates growth from contraction for a third month in May.
Beijing has set an ambitious economic growth target of around 5% for this year, which many analysts say will be a challenge to meet as prolonged weakness in the property sector and tepid consumer demand remain a drag on the world’s second largest economy.
Europe’s inflation gauge will draw attention throughout the day, with the central bank promising to cut interest rates from a record high of 4 percent at its next June meeting, but it remains to be seen how quickly they will cut rates after that. Especially if Friday’s inflation data shows that price pressures remain volatile.
Economists expect eurozone inflation to accelerate from 2.4% in April to 2.5% year-on-year in May, while core inflation remains stable at 2.7%.
This alone is unlikely to deter the ECB from cutting in June but some officials are already arguing against the need to ease any further.
Finally, the market will react strongly on US PCE numbers. The data is foreseen at 0.2% moderately lower from the previous month of 0.3%.
Policymakers are facing mounting pressure to hike rates amid ongoing weakness in the yen which hurts consumption by inflating the cost of raw material imports.
The economic data comes as markets are becoming resigned to the higher-for-longer interest rate narrative after last weeks Fed minutes, along with cautious sounding remarks from policymakers who expressed doubt whether inflation is indeed on a reliable downward trajectory.
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Commodity Samachar
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