Facing the last week of the month is quite normal to see little fundamental headlines’ scheduled. Market will continue speculating on economic policy decisions, although remain cautious, with several Central Banks meetings during the first days of June. Profit taking due month ending, particularly if the greenback ends the week higher, will be another reason to be cautious next week. Investors will be paying attention particularly to the following readings:
JPY and BOJ Minutes, May 26th
- Dovish/more easing to come: JPY Bearish
- Hawkish/pausing in easing: JPY Bullish
- Below Expected: EUR Bearish
- Key pairs to watch: USD/JPY, EUR/JPY
BOJ Minutes are not expected to provide much more news on current facilities programs: the BOJ will stick to its pledged to attain 2% inflation within two years trough unlimited bond buying and by doubling the monetary base. What will decide the destiny of the JPY against its rivals, will be local share market reactions to the news: after being on a one-way run since November past year, the Nikkei so a strong slide of over 7% in one single journey past Thursday. If somehow BOJ Minutes are enough to convince buyers, and strong bounce, yen crosses will continue heading higher slowly advancing to fresh yearly highs.
Lack of confidence in further action, or the announcement of a comfortable stance in the Central Bank, may trigger further selling in stocks, and approach investors to panic, and yen will likely react strengthening across the board
EUR and German CPI, May 29th
- Previous -0.5% -Expected 0.1% Preliminary reading
- Above Expected: EUR Bullish
- Below Expected: EUR Bearish
- Key pairs to watch: EUR/USD, EUR/JPY
Being a preliminary reading of German inflation, its impact over the EUR will depend on the degree of deviation from the market expected number. Rising inflation will become a concern although is quite unlikely, while a reading below previous one will rise concerns over the situation of the country, and weight on the EUR.
USD and US GDP, May 30th
- Previous 2.5% - Preliminary reading
- Above Expected: USD Bullish
- Below Expected: USD Bearish
- Key pairs to watch: EUR/USD, GBP/USD, USD/JPY, AUD/USD
Market is slowly changing back to the old days, when good US data actually favored dollar gains, instead of triggering risk appetite and sending greenback down across the board. Although the chance is not firm, it’s actually here; will take some time to firm up, but chances this time are of a positive reading, above 2.7% to trigger some dollar advances across the board. Being a preliminary reading, it may later be corrected, but as higher the number above mentioned 2.7%, the higher the impact on the market.
Below 2.0% will be extremely dollar negative, signaling economic slowdown, which will be translated by market players as long live to king QE.