Monday the 17th of May
Before we look forward to this week in the markets, It is always a good idea to look back at what has been happening previously.
The US Dollar started last week on the defensive following the big miss of April NFP. However, the Dollar rallied abruptly following the surprise to the CPI number. Inflation is now going to be the key to the US Dollars direction in the longer term.
The Federal Reserve and its speakers are saying that above-target inflation is just transitory. The markets seem to be buying that story at the moment.
This belief saw the US CPI inspired dollar up-move gradually reversed, and the Dollar finished the week on the soft side, but off its weekly lows.
My question now is how long is transitory?
2 or 3 months maybe, what happens if it’s a year or longer? It’s key to market direction.
This weeks highlight may be Wednesday’s FOMC release of its minutes for their April meeting, and they are expected to be fairly dovish, as they focus on full US employment or the lack of it, and play down inflationary risk.
This week is going to be interesting for the UK and the GBP.
Tomorrow the UK unemployment numbers are released, with the unemployment rate of 4.9% holding steady. On Wednesday the UK will release its CPI which is expected to rise to 1.4% in April, up from 0.7% the previous month. Then Friday UK Retails Sales for April are expected to show rise of 4%.
Friday will be a big day for Flash PMI’s for May, where the Euro Zone, UK and the USA all expected to have numbers at 60 or better. However, Japan will likely show more modest numbers with a Manufacturing forecast o 53.5.
Good Luck and Happy Trading.
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