Weekly Outlook, May 10-14, 2021: Top Economic Events to Watch This Week
Arslan Butt • 4 min read
The broad-based U.S. dollar failed to stop its early-day negative performance and end this week on the bearish track mainly due to the market’s upbeat mood, which undermined the safe-haven assets and contributed to the U.S. dollar losses. Meanwhile, the benchmark U.S. 10-year Treasury yields dropped near the two-week low on the back of positive U.S. economic data, which put some additional pressure on the U.S. dollar. In addition to this, the Federal Reserve’s continued ultra-easy monetary policy was seen as another key factor that kept the U.S. dollar lower.
Looking ahead into the coming week, the series of CPI and Unemployment Rate, along with U.S. Retail Sales and BOE Gov Bailey’s speech, can drive plenty of headlines to keep the markets on the move. Besides this, the geopolitical tensions and coronavirus woes will also closely follow as they could play a key role in determining risk levels in the market.
Top Economic Events to Watch This Week
The Australian Bureau of Statistics releases this data, which is a survey of goods sold by retailers based on a sampling of retail stores of different types and sizes. Changes in Retail Sales are broadly followed as an important indicator of consumer spending as it shows the retail sector’s performance over the short and mid-term. Therefore, high figures are seen as bullish for the AUD currency. Conversely, low figures are seen as negative (or bearish for the AUD currency.
2) BoE’s Governor Bailey speech – Tuesday, 15:30 GMT
Andrew Bailey is the current Bank of England’s Governor. He took office on March 16th, 2020, at the end of Mark Carney’s session. Governor Bailey was working as the Chief Executive of the Financial Conduct Authority before being selected. This British central banker was also the Deputy Governor of the Bank of England from April 2013 to July 2016 and the Chief Cashier of the Bank of England from January 2004 until April 2011. As governor of the central bank, he controls short-term interest rates, which in turn, he has more influence over the nation’s currency value than any other person. Traders closely observe his public engagements as they are usually used to leave detailed clues regarding future monetary policy. Thus, the hawkish tone is seen as bullish for GBP currency; conversely, the dovish tone is understood as bearish for the GBP currency.
This data is typically released by the National Bureau of Statistics of China, a measure of retail price variations within a representative basket of goods and services. The result is a complete summary of the results obtained from the rural consumer price and urban consumer price index. As we know, the purchasing power of the CNY is dragged down by inflation. So, the CPI is an important indicator to measure inflation and changes in purchasing trends. The rise in the consumer price index would indicate that inflation has become a destabilizing factor in the economy, which urges the People’s Bank of China to tighten monetary policy and fiscal policy risk. In that way, the high reading is considered bullish for N.Y. currency; conversely, the low reading is seen as bearish for the CNY currency.
ii) Producer Price Index (YoY) – This data is typically released by the National Bureau of Statistics of China, a measurement of the rate of inflation experienced by producers. It captures the average changes in prices received by Chinese domestic producers of commodities in all processing stages (crude materials, intermediate materials, and finished goods). Changes in the PPI are seen as a leading indicator of commodity inflation. If the Producer Price Index increases too much, it would indicate that inflation has become a destabilizing factor in the Chinese economy, urging the People’s Bank of China to tighten monetary policy and fiscal policy risk. In that way, the high reading is considered bullish for N.Y. currency; conversely, the low reading is seen as bearish for the CNY currency.
4) Consumer Price Index (MoM) – Wednesday, 13:30 GMT
This data is normally released by the U.S. Bureau of Labor Statistics, which gauges the price movements by comparing the retail prices of a representative shopping basket of goods and services. As we know, the purchasing power of the Greenback is influence by the inflation rate. In that way, the CPI is understood as a key indicator to measure inflation and changes in purchasing trends. Thus, the upwards figures are seen as positive (or bullish) for the Greenback. Conversely, the low figures are seen as negative (or bearish) for the USD currency.
5) Crude Oil Inventories – Wednesday, 15:30 GMT
This data is released by the Energy Information Administration (EIA), a U.S. key indicator and primarily affects the Canadian dollar due to Canada’s sizable energy sector. It measures supply and demand imbalances in the market, leading to changes in production levels and price volatility. ‘Actual’ less than ‘Forecast’ is seen as bullish for USD currency.
6) U.S. Unemployment Claims – Thursday, 13:30 GMT
This data is typically released by the U.S. Department of Labor, which measures the number of people filing first-time claims for state unemployment insurance. However, the larger than expected number shows weakness in this U.S. labor market, which leaves a negative impact on the strength and direction of the U.S. economy. Conversely, the low readings are seen as positive or bullish for the greenback currency.
7) US Retail Sales (MoM) – Friday, 13:30 GMT
This data generally released by the U.S. Census Bureau, which measures the total receipts of retail stores. Monthly percent changes show the rate of changes in such sales. However, the changes in Retail Sales are broadly followed as a leading indicator of consumer spending. Thus, the ‘Actual’ greater than ‘Forecast’ is seen as bullish for the Greenback; conversely, a low figure is seen as negative (or bearish) for the U.S. dollar.