The Week Ahead – Prelim May PMIs, Central Banks, and Inflation in Focus

On Wednesday, the FOMC meeting minutes will influence ahead of GDP and jobless claims on Thursday.

US Core PCE Price Index, personal spending, and personal income wrap up a busy week. Sticky inflation would fuel bets on a June interest rate hike and remove the chances of an H2 2023 rate cut.

With the economic calendar on the busy side, investors should also consider FOMC member chatter.

For the EUR:

It’s a relatively busy week for the EUR. Eurozone consumer confidence numbers for May kickstart the week. An unexpected slump in confidence would weigh on the EUR/USD. Sticky inflation and an elevated interest rate environment could test consumer sentiment and signal a shift in spending plans.

Prelim private sector PMIs for France, Germany, and the Eurozone will provide direction on Tuesday. A more marked contraction in the German manufacturing sector would weigh on the EUR/USD and question the ECB economic outlook following the weak German factory orders and industrial production numbers.

On Wednesday, the German Ifo Business Climate Index and sub-components will draw interest ahead of German Q1 GDP and GfK Consumer Climate numbers on Thursday.

With private sector activity and the German economy in the spotlight, investors should monitor ECB commentary.

With a busier economic calendar, investors should also consider ECB commentary. Executive Board members Andrea Enria (Tues/Fri), Luis de Guindos (Mon/Tues/Thurs), Frank Elderson (Mon), ECB Chief Economist Philip Lane (Mon/Fri), and ECB President Christine Lagarde (Wed) are on the calendar to speak.

For the Pound:

It is an important week ahead for the Pound. On Tuesday, private sector PMI numbers will draw interest. We expect the Services PMI to have more impact. However, the UK CPI Report will be the more influential report, due on Wednesday ahead of retail sales numbers on Friday.

A pickup in service sector activity, sticky inflation, and an unexpected rise in retail sales would fuel bets on a BoE interest rate hike.

With inflation in the spotlight, investors should also monitor Bank of England commentary.

Andrew Bailey, Huw Pill, Silvana Tenreyro, and Catherine Mann will attend the Treasury Select Hearing on the May Monetary Policy Report.

Bank of England Governor Andrew Bailey (Wed) and Jonathan Haskel (Tues/Thurs) are also on the calendar to deliver speeches.

For the Loonie:

It is a quiet week ahead on the economic calendar for the Loonie.

RMPI numbers will be in focus on Tuesday ahead of manufacturing and wholesale sales figures on Wednesday.

While the stats will draw interest, crude oil inventories and market risk sentiment will likely have more impact.