Top 5 FX Events Talking Points:
- Both the Japan inflation and UK inflation reports for April are due to show that price pressures continued to rise, broadly reflecting gains made by oil prices in recent months.
- The May Fed meeting minutes will strike a largely neutral tone as they predate recent US-China trade war concerns flaring up, while the April ECB meeting minutes will likely highlight a conversation about reducing the Staff Economic Projections’ growth and inflation forecasts.
- The US economy looks like it has gotten the second quarter off on slower footing, and the upcoming April US durable goods orders report doesn’t look promising.
Join me on Mondays at 7:30 EDT/11:30 GMT for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below.
05/22 WEDNESDAY | 08:30 GMT | GBP CONSUMER PRICE INDEX (APR)
The rebound in oil prices in the first four months of 2019 has been a driving factor behind the rebound in inflation readings across the world in recent weeks, and the forthcoming April UK Consumer Price Index should fit this pattern. According to a Bloomberg News survey, the upcoming April UK inflation report is forecast to show headline inflation due in at 2.2% from 1.9% (y/y), while the monthly reading is due in a 0.7% from 0.2%. Core CPI is expected to have increased to 1.9% from 1.8% (y/y).
Read the full report: April UK Inflation & GBPJPY Price Forecast
05/22 WEDNESDAY | 18:00 GMT | USD FOMC MEETING MINUTES (MAY)
The tone at the May Fed meeting was rather conciliatory insofar as policymakers were no longer sounding the alarm on an imminent slowdown to the US economy after the surprisingly strong 3.2% annualized growth reading for Q1’19. While the interim period since the May Fed meeting has seen US-China trade war concerns realized, the minutes won’t reflect these events yet. As such, the May Fed minutes should reflect the neutral tone deployed by Fed Chair Jerome Powell and the FOMC, which was that interest rates would be on hold for the foreseeable future.
Read the full report: May Fed Meeting Minutes & DXY Index Price Forecast
05/23 THURSDAY | 11:30 GMT | EUR ECB MEETING MINUTES (APR)
The European Central Bank has been dealing with calls to revise its growth and inflation forecasts lower amid ongoing sluggishness in regional PMI readings and medium-term inflation expectations month after month. With some fearing that ECB President Mario Draghi is trying to declare some sense of premature victory over the fallout from the European sovereign debt crisis as the end of his presidency is quickly approaching in October 2019, no substantive action – verbal or otherwise – has been taken since the TLTRO3 announcement at the March ECB meeting.
Read the full report: April ECB Meeting Minutes & EURJPY Price Forecast
05/23 THURSDAY | 23:30 GMT | JPY National Consumer Price Index (APR)
According to a Bloomberg News survey, the Japanesenational consumer price index is due in at 0.9% in April, up from 0.5% (y/y), while the core reading – ex-fresh food – is due in at 0.9% from 0.8% (y/y). The core-core reading – ex-fresh food & energy – is due in at 0.6% from 0.4%(y/y). While the Bank of Japan isn’t expected to tweak policy any time soon, these data should simply reinforce the idea that no more easing should be anticipated on the immediate horizon.
Read the full report: April Japanese Inflation & USDJPY Price Forecast
05/24 FRIDAY | 12:30 GMT | USD DURABLE GOODS ORDERS (APR P)
The durable goods orders report makes for an important barometer of the US economy, given that approximately 70% of GDP is accounted for by consumption. The durable goods report differs from the advance retail sales report in a key manner: durable goods are items with lifespans of three-years or longer. These are goods from household appliances like refrigerators and washing machines to transportation like automobiles and airplanes.
The key aspect is that these goods typically require greater capital investment or financing to secure, behaviors that consumers and businesses don’t undertake unless they’re feeling confident regarding their future cash flows. Accordingly, traders can use the report as a proxy for business’ and consumers’ financial confidence and health, and more broadly, that of 70% of the US economy. According to a Bloomberg News survey, the preliminary Aprilreading is expected to show a drop of 2% after the 2.6% gain in March.
Read the full report: April US Durable Goods Orders & EURUSD Price Forecast
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--- Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher, email him at firstname.lastname@example.org