May 23 – Economic Events Outlook – Risk-on Flow Returns ahead of FOMC Meeting Minutes
Arslan Butt • 2 min read
Good day, traders.
You must be excited today as finally, we have enough economic events to determine trends in the sideways markets. Today is all about FOMC meeting minutes, U.K’s CPI and a number of manufacturing and services PMI figures from the Eurozone. Let’s check them out…
Economic Event’s Watchlist
Eurozone – EUR
Purchasing Managers’ Index (PMI) – First of all, let me help you understand the PMI’s data and how we can trade them.
It’s a survey of about 400 purchasing managers which requires respondents to rank the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. That makes it a leading indicator of economic health and businesses, therefore, react immediately to market conditions, and their purchasing managers brace themselves for the upgraded market conditions. PMI figures above 50 indicate industry expansion, below indicates contraction.
I hope you know enough about PMI now and let’s look at the European figures and forecast.
French Manufacturing PMI is expected to drop from 53.8 to 53.6. French PMI is struggling since Dec 2017 as it has dropped massively from 59.3 to 53.4 in the Q1 of 2018.
Likewise, the German Flash Manufacturing PMI is also expected to drop from 58.1 to 57.9. Comparing both manufacturing figures, the German PMI carries more importance and we may see more fluctuations upon its release.
French Flash Services PMI is also expected to slip from 57.4 vs. 57.1 whereas, German Flash Services PMI is likely to stay at 53.1.
Great Britain Pound – GBP
CPI y/y – Inflation shows a change in the price of goods and services purchased by consumers. It looks like the UK is struggling with inflation. In April, the CPI slowed down to an annual pace of 2.5% down from 2.7%, yet in between the 1-3% range was mandated by the BOE (Bank of England). As per economists forecast, inflation is expected to remain at 2.5% in May.
U.S. Dollar – USD
FOMC Meeting Minutes – For all the newbies out there, this is a detailed record of the FOMC’s most recent meeting, providing in-depth insight into economic and financial conditions that influenced their vote on where to set interest rates. At 18:00 (GMT), the Federal Reserve will be publishing minutes from its meeting in early May when it decided to leave the interest rate unchanged. In the current FOMC minutes, traders will be expecting to hear about June’s rate hike which I believe is already priced in.
Fellows, the dollar can face strong selling pressure in case FOMC fails to communicate about June rate hike.
Crude Oil Inventories – Unfortunately, the API report came out against our forex trading signal on Tuesday. Today, we may have a chance to make a few pips on EIA stockpiles report. By the way, the EIA inventories are expected to drop by -2.5M vs. -1.4M previously.
All the very best traders and keep following for forex trading signals and exciting trading ideas.