Looking back to the big event of the previous week, US CPI posted a 13 year high of 5%. It is becoming clear to me that the market is split into two camps. The US Federal Reserve believers, and the sceptics.
The believers are happy buying US bonds and stocks without a care in the world because Jerome Powell says it’s ok high inflation will pass.
The Fed sceptics are concerned that policy intended to boost the economy in a time of emergency is still being implemented. Now the Covid emergency is over, and the US economy is growing robustly once more. In their opinion, monetary policy should be changing.
This week the Federal Reserve will have a monetary policy meeting on Wednesday. The whole market is looking at the statement wording and Chair Jerome Powells press conference for clarity. I’m not sure they will get it, as the Fed might want more data before talking tapering.
Data this week could be market moving, from the releases starting on Tuesday, with April’s UK employment which is likely to show an increase of 150K. UK average earnings rising to 5.3%. The unemployment rate is expected to drop to 4.7%.
Other releases on Tuesday include the German inflation rate for May, 2.5% expected. Then later in the day, US PPI for May is expected at 6.3% While US Retail Sales are expected to show a drop of 0.8% MoM.
Wednesday will see the release of inflation data for the UK and Canada. However, the main event is the FOMC.
Thursday, we will be recovering from the aftershocks of the FOMC, and have Australian employment data and US weekly jobless claims to look forward to.
Finally, on Friday, the Bank of Japan meets for their June monetary policy meeting, no change is expected. Also on Friday, we will see the release of UK retail sales.
Don’t forget today the UK will announce that they will wait another 30 days before fully lifting pandemic restrictions. This might be a short term GBP negative.
Have a great weeks trading.
You can contact us at email@example.com