The Week Ahead – EU Elections, UK Politics, Stats and Trade in FocusIt’s another big week ahead. EU Elections will get the markets going early on Monday. Trade war chatter and UK politics and stats will also be in focus.
On the Macro
For the Dollar:
It’s a relatively busy week ahead for the Greenback.
May consumer confidence figures due out on Tuesday kick off the week. Following a jump in confidence in April, forecasts are for consumer confidence to see a further uptick in May.
Any upside for the Dollar may be limited, however, should trade war jitters linger.
Later in the week, 2nd estimate GDP figures for the 1st quarter, April trade data and the weekly jobless claims numbers are due out.
The focus will be on the GDP numbers, with any downward revision likely to weigh on risk sentiment.
At the end of the week, the FED’s preferred Core PCE Price Index figures are due out alongside April personal spending and May Chicago PMI numbers.
Barring a material deviation from prelim, finalized May consumer sentiment figures will have a muted impact on Friday. We can expect April pending home sales on Thursday to garner more attention than normal, following disappointing new home sales last week.
Outside of the stats, progress or lack of on trade talks will also need to be factored in during the week.
The Dollar Spot Index ended the week down 0.39% to $97.613.
For the EUR:
Economic data is on the quieter side in the week ahead. German consumer climate and unemployment figures due out on Tuesday and Wednesday will have the greatest impact in the 1st half of the week.
Barring particularly disappointing numbers, French consumer spending and 2nd estimate GDP numbers due out on Wednesday will likely be brushed aside.
Spanish, Italian and German inflation numbers due out on Thursday and Friday will be of interest following the latest ECB minutes. Softer inflation will likely pressure the EUR late on.
German retail sales are also forecasted to be EUR negative on Friday.
While the stats will garner plenty of attention, the election results from the EU Parliamentary elections will kick the week off.
The EUR/USD ended the week up 0.4% to $1.1203.
For the Pound:
There are no material stats due out of the UK in the week ahead.
Market reaction to the EU Parliamentary elections and chatter from the UK parliament will be the key driver.
Through the week, an end to Theresa May’s leadership will bring successorship into focus. Pro-Brexit and expect the Pound to be under further pressure in the week if there’s any talk of a no-deal breakaway.
The GBP/USD ended the week down 0.08% to $1.2714.
For the Loonie:
It’s a big week ahead. First up is the Bank of Canada monetary policy decision on Wednesday. Trade war jitters and woeful economic indicators globally will likely offset the effects of solid retail sales figures.
At the end of the week, GDP numbers and April’s RMPI are due out. While the focus will be on the GDP numbers, a forecasted April bounce in the RMPI would soften the blow to any weak GDP figures.
Outside of the stats, expect market sentiment towards the U.S – China trade war to also influence.
The Loonie ended the week up 0.16% to C$1.3437 against the U.S Dollar.
Out of Asia
For the Aussie Dollar:
It’s another quiet week ahead. April building approval and 1st quarter private new CAPEX are due out on Thursday.
The focus will be on the CAPEX figure ahead of April private sector credit numbers due out on Friday.
Outside of the numbers, market sentiment towards the extended U.S – China trade war will likely overshadow the stats.
The Aussie Dollar ended the week up 0.86% to $0.6927.
For the Japanese Yen:
The markets will need to wait until Friday for key stats. May inflation, April prelim industrial production, and retail sales are due out.
While the focus will be on industrial production and retail sales figures, market risk sentiment will continue to be the key driver.
Fall out from the EU elections and sentiment towards the U.S – China trade war will remain the driver in the week
The Japanese Yen ended the week up 0.70% to ¥109.31 against the U.S Dollar.
For the Kiwi Dollar:
After a quiet start to the week, the RBNZ financial stability report and May business confidence figures are due out on Wednesday.
Following the latest rate cut, we can expect sensitivity to the report and business confidence numbers.
On Thursday, while building consents will likely have a muted influence, the annual budget will be key in the week.
The Kiwi Dollar ended the week up 0.52% to $0.6553.
Out of China:
May private-sector PMI numbers are due out on Friday. The level of influence on risk sentiment will be dependent upon trade war chatter through the week. Progress and the markets will be less sentsitive to any weak figures. A lack of progress and expect risk aversion to hit the markets.
U.S – China Trade War: Sentiment towards the extended U.S – China trade war will continue to grip the markets in the week ahead. There’s still a long way to go before the G20 Summit at the end of June. Some progress will be needed to support a more positive discussion between Xi and Trump at the G20.
EU Elections: The EU Parliamentary election results will be out later today. Expect plenty of reaction to the British vote and what it means for Brexit… There will also be a reaction to the rest of the results…
UK Politics: What’s next for the Tories and UK politics as we know it today… Will there be a change in approach to Brexit to finally break the deadlock?
On the Monetary Policy Front:
For the Loonie, the Bank of Canada will deliver its May monetary policy decision. While retail sales impressed last week, weak economic data from the Eurozone and the U.S and the ongoing trade war between the U.S and China will continue to question economic prospects near-term.