The US dollar is the currency ruling the market, marking the third consecutive week of a positive uptrend. Bullish momentum in the greenback seems to be stopping now as the US bond yields dipped. It looks like the dollar may have been feasting off the euro’s instability, as well as getting a boost from the slightly positive US data.  

This week we don’t have major catalysts from the United States. Nevertheless, the economic events from New Zealand, United Kingdom, and Canada will remain in check. Take a look!

Watchlist – Top Economic Events This Week

Monday – May 7

On Monday, volatility will remain low as UK banks will be closed in observance of May Day. Though we will monitor the speeches from the US FOMC members, I’m not expecting any noticeable movement.

US Dollar – USD

FOMC Member Bostic is due to deliver opening remarks at the Federal Reserve Bank of Atlanta’s 23rd Annual Financial Markets Conference, in Florida at 12:25 (GMT).

FOMC Member Barkin will speak at George Mason University, in Virginia at 18:00 (GMT). Audience members may ask questions, so we could observe a slight reaction to any unexpected responses.

Tuesday – May 8

Australian Dollar – AUD

Retail Sales m/m – The primary gauge of consumer spending, which accounts for the majority of overall economic activity. Australian Bureau of Statistics will release the retail sales data. As per economists’ forecast, retail sales are likely to drop to 0.2% vs. 0.6% in April.

New Zealand Dollar – NZD

Inflation Expectations q/q – This is not actual inflation but a survey of about 100 consumers asking respondents where they expect prices to be 24 months in the future.  However, expectations of future inflation can manifest into real inflation, primarily because workers tend to push for higher wages when they believe prices will rise. Back in February, the inflation rose to 2.1% from 2%. In the absence of this month’s forecast, the chances of good movement remain alive.  

US Dollar – USD

Fed Chair Powell will deliver a speech titled “Monetary Policy Influences on Global Financial Conditions and International Capital Flows” at the High-Level Conference on the International Monetary System, in Zurich. His discussion on monetary policy and inflation may cause moves in the market. Consequently, traders will listen closely for any hint about the expected June hike.

Wednesday – May 9

US Dollar – USD

PPI m/m – The producers’ price index is a leading indicator of consumer inflation. Consumers absorb the higher costs for goods and services. The PPI is expected to drop to 0.2% from 0.3%. A lower PPI can lead to a lower CPI which pressures central banks to release dovish monetary policies.

New Zealand Dollar – NZD

Official Cash Rate – The RBNZ is due to release the cash rate at 21:00 (GMT). The RBNZ is expected to keep the rate on hold at 1.75%. The RBNZ press conference can provide us with clues about Adrian’s stance on next policy action.  

Thursday- May 10

Most of the European markets will remain closed in observance of Ascension Day. Yet, key economic figures from the US and UK will keep the market active.

Great Britain Pound – GBP

UK Monetary Policy Report – Back in April, the Bank of England kept a hawkish tone by saying that rates will rise faster and earlier than expected. This caused the bullish trends in the Sterling.

Official Bank Rate – The rate decision is due at 13:00 (GMT). The BOE is expected to keep the rate unchanged at 0.50%. The Sterling may have exhibit bearish movement on the news.

Until a few weeks ago, the BOE was expected to increase rates in this May decision. However, the recent data have been very disappointing. Inflation slipped from 2.7% to 2.5% and the GDP grew by only 0.1% q/q in Q1. Moreover, the PMI figures also point to an upcoming slowdown. Logically, the BOE should be keeping the rates on hold until the economic data is back on track.

MPC Official Bank Rate Votes – The voting could move the market if released with a change. Presently, the voting is forecasted as 2-0-7. This means 7 out of 9 members are expected to keep the rate on hold while 2 members are expected to vote for a hawkish monetary policy. Considering the worse than expected economic figures, it looks like the 2 members who voted for a rate hike in March may change their decisions. As a result, the pound could be in trouble.

US Dollar – USD

CPI m/m – The Bureau of Labor Statistics will be releasing the consumer price index data at 12:30 (GMT). The US inflation is expected to gain by 0.3% vs. -0.1% in April. Additionally, the Core CPI m/m is expected to gain by 0.2%.

Friday – May 11

Canadian Dollar – CAD

Labor Market Report – The Statistics Canada will report the Canadian labor market figures. Employment change is expected to drop to 19.5K vs. 32.3K in April. The unemployment rate is expected to remain unchanged at 5.8% causing the Canadian dollar to weaken on sentiments.

That’s pretty much it for now, brace yourself for volatility and check out FX Leaders News Trading Strategy for a better understanding of the fundamentals. Have an awesome week.