There are no major central banks sharing monetary policy decisions this week but that doesn’t mean that traders won’t try to price in their expectations!
This week we’ll see more data from China, the latest labor market readings from the U.K. and Australia, and a slew of FOMC member speeches that may provide clues on their June decision.
Before all that, ICYMI, I’ve written a quick recap of the market themes that pushed currency pairs around last week. Check it!
And now for the closely-watched economic indicators on the economic calendar this week:
China’s Data dump
As mentioned in the Global Market Recap, weak inflation and trade data from China spooked the markets enough to drag on “risk” assets like AUD, NZD, and crude oil.
On Tuesday, May 16 at 2:00 am GMT, we’ll get another snapshot of how the world’s second-largest economy is faring months after it lifted its COVID restrictions.
Fixed asset investment is expected to accelerate from 5.1% to 5.7% from January to April compared to the same period a week ago. Ditto for the annualized industrial production, which is seen shooting up from 3.9% to 10.9%.
On the consumers’ side, the pace of retail sales is seen doubling from 10.6% to 22.0% from a year ago in April while the unemployment rate steadies at 5.3%.
Downside misses from these reports could fuel concerns over global demand and economic recovery, so make sure you’re around during the event!
UK’s labor market readings
In its decision last week, the Bank of England (BOE) shared that the labor market proved to be stronger than what they had projected back in February.
Let’s see if the U.K.’s employment situation will continue to provide the BOE room to tighten its policies some more.
On May 16 at 6:00 am GMT, markets see a net of 31,200 jobless claimants for the month of March, a bit higher than the 28,200 figure in February.
Meanwhile, the three-month average earnings is seen slowing down from 5.9% to 5.8% compared to the previous year while the unemployment rate is expected to maintain its 3.8% February reading.
Australia’s labor market reports
Will this week’s Australian jobs numbers support another rate hike for the Reserve Bank of Australia (RBA)?
On Thursday, May 18 at 1:30 am GMT, the economy is expected to add a net of 24,100 jobs for the month of April. That’s half of March’s 53,000 net addition!
Despite the lower job addition estimates, the unemployment rate is expected to remain at 3.5% for a third month in April. The jobless rate surprised to the upside in the last two releases so make room for surprises this week!
Stronger-than-expected labor market reports would not only support the RBA’s latest rate hike but also leave the central bank more room to tighten its policies further in June.
FOMC member speeches
Just when the markets were feeling confident of their calls for a rate hike pause in June, last week’s CPI and PPI releases as well as hawkish speeches by FOMC members Bowman and Williams shook their biases.
We’ll hear more from the FOMC crew this week starting with Federal Reserve Bank of Minneapolis President Neel Kashkari who will be speaking today at 1:15 pm GMT. Last week Kashkari noted that stubbornly high inflation meant that the Fed would have to keep its policies tight “for an extended period of time.”
Fed Governor Lisa Cook will then take center stage at 9:00 pm GMT on the same day.
Then, on May 16 at 2:00 pm GMT Fed Governor Michael Barr will share his two cents, followed by New York Fed President John Williams (4:15 pm GMT) and Chicago Fed President Austan Goolsbee (11:00 pm GMT).
Thursday’s May 18 lineup includes Fed Governor Philip Jefferson (1:05 pm GMT), an encore by Michael Barr (1:30 pm GMT), and Dallas Fed President Lorie Logan (2:00 pm GMT).
The FOMC parade concludes on Friday May 19 when Williams (12:45 pm GMT) and Bowman (1:00 pm GMT) make another appearance ahead of Powell’s discussion.
That’s right! At 3:00 pm GMT the Fed head honcho will talk “Perspectives on Monetary Policy” in a panel discussion that includes former Fed Chairman Ben Bernanke. Who needs streaming services when you can watch monetary policy drama, amirite?
Hawkish messages from the FOMC gang throughout the week can set the tone for USD’s intraweek trends, so make sure to mark their speech dates and factor them into your trade ideas this week!
