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Currency and Stock Markets Weekly Outlook

Are the bad times behind us?

Mon, May 12 2008, 14:03 GMT
by Adam Narczewski

X-Trade Brokers, XTB

Now, when markets are slowly rebounding investors are following macroeconomic news with great attention. The week ahead of us will bring a bunch of inflation reports.

Are the bad times behind us? This question is being asked by many investors all around the world. This week inflation reports will be on the spotlight? Why are they so important? They determine the future monetary policy of central banks.

On Tuesday, we are expecting a report from the UK, where both CPI and Core CPI are forecasted to increase. The same day, Ben Bernanke, Fed’s Chairman, is due to speak to the Atlanta Fed's Financial Markets Conference, via satellite. On Wednesday, the U.S will publish the CPI report, with inflation expected to remain unchanged from the previous month. The Bank of England will also publish its Inflation Report. The Bank of England (BOE) Inflation Report provides detailed economic analysis and an assessment of inflation over the next two years. The report is published quarterly and holds critical insights into the bank's view of inflation and the economic conditions that will effect interest rates in the future.

Thursdays are usually rich in macroeconomic publications and this time will be no exception. With great anticipation we are expecting the Euro zone CPI publication and industry reports from the United States: the Empire State Business Conditions Index, the TIC Net Long-Term Transactions, Industrial Production, and the Philadelphia Fed Manufacturing Index. Also, Bernanke is expected to deliver a speech titled "Credit Market Turmoil: Causes, Consequences and Cures" at the Chicago Fed's annual conference.

Friday will be calmer. Publication worth attention include Japanese GDP, Euro zone’s Trade Balance, and U.S’s University of Michigan Consumer Index.

The upcoming week will tell us about inflationary pressures in many economies. Investors anxiously are waiting expecially for the Euro zone’s report. The European Central Bank is in a tough situation, where inflation is increasing while the economy is slowing down. Higher than expected inflation might burn the idea to cut interest rates in the Euro zone in the second half of the year.

Published on  Mon, May 12 2008, 14:06 GMT

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