Start your trading week right by prepping for these top-tier catalysts and checking out my potential trade setup.
Don’t forget to review which factors drove forex market price action last week, too!
Major Economic Events:
U.K. preliminary GDP (May 12, 7:00 am GMT) – A contraction of 1.6% is eyed for the first quarter of the year, following the 1.3% expansion in Q4 2020.
Keep in mind that the BOE just agreed to start reducing weekly gilt purchases, so a strong upside surprise might be enough to keep tightening hopes in play. A weak result, on the other hand, could dash expectations that the central bank could lower its asset purchase target.
U.S. CPI (May 12, 1:30 pm GMT) – Slower price pressures are eyed for April, with headline inflation projected to come in at 0.2% and the core reading likely to show a 0.3% uptick.
A downside surprise could weigh on Fed tightening expectations, especially since last week’s NFP release turned out to be a huge bummer.
U.S. retail sales (May 14, 1:30 pm GMT) – Consumer spending also likely slowed in April, following stellar gains back in March.Headline retail sales is projected to post a 1.0% gain after the earlier 9.8% jump while the core version of the report could print a 0.8% increase.
Forex Setup of the Week: USD/JPY
I’m keeping tabs on this sketchy head and shoulders pattern on the 4-hour chart of USD/JPY.
Price has yet to test and break below the neckline support to confirm that a reversal from the uptrend is taking place. If that happens, the pair could fall by the same height as the chart formation.
Dollar traders are already counting on a slowdown in price pressures and consumer spending based on the market consensus for the CPI and retail sales reports.
Downside surprises might spur a steeper selloff for the Greenback, and a pickup in risk aversion might favor the lower-yielding yen in this case.
