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. CPI (May 19, 7:00 am GMT) – A strong improvement from 0.7% to 1.4% is expected for the U.K. economy’s annual CPI reading, which might be enough to boost BOE tightening speculations.
The BOE already reduced the size of weekly gilt purchases in their latest policy decision but noted that below-target inflation is enough reason to keep rates and asset purchases unchanged.
More optimistic forecasts from the likes of NIESR predict that annual inflation could reach 1.8% by year-end, and that the reopening of the U.K. economy likely accelerated price pressures recently.
FOMC meeting minutes (May 19, 7:00 pm GMT) – The Fed kept interest rates unchanged as expected in their April monetary policy statement, refraining from dropping hints on when they might taper or tighten.
The transcript of their huddle should contain more insights from policymakers, although it’s worth noting that this meeting took place prior to the release of downbeat April jobs data and stronger than expected CPI for the same month.
Any indication that other committee members are shifting to a more hawkish stance might mean gains for the U.S. currency.
Australia’s jobs report (May 20, 2:30 am GMT) – After printing back-to-back upside surprises, the Land Down Under could show a slowdown in hiring at 20.3K for April.
This should be enough to keep the unemployment rate steady at 5.6%. An upside surprise could keep AUD bulls hopeful about RBA tightening hints.
Eurozone flash PMIs (May 21, starting 8:15 am GMT) – It’s the third week of the month, which means a fresh round of flash PMI readings from the top eurozone economies!
France is slated to print a dip from 58.9 to 58.6 for its manufacturing PMI and an improvement from 50.3 to 53.0 for its services PMI. Germany could report a drop from 66.2 to 66.0 for the manufacturing sector and a climb from 49.9 to 52.0 for the services industry.
This should bring the region’s aggregate manufacturing PMI down from 62.9 to 62.5 and the services PMI up from 50.5 to 52.5.
Forex Setup of the Week: GBP/USD
This week, I’m keeping tabs on the ascending trend channel on Cable. The pair just bounced off the mid-channel area of interest and might be setting its sights on the resistance.
If the FOMC minutes due in the first half of the week acknowledge the improvements in the U.S. economy, tightening expectations could prop up the Greenback then. In that case, a deeper pullback could lead to a dip to the channel support at the 1.4000 handle.
The channel bottom is also in line with the 100 SMA dynamic support, which is above the 200 SMA to confirm that the uptrend is more likely to resume than to reverse.
U.K. data lined up on Friday include the retail sales and flash PMI readings from the manufacturing and services sectors. Stronger than expected figures might be enough to help GBP/USD sustain its climb.
