Forecasting the upcoming week: Focus remains on US inflation and geopolitics

The US Dollar (USD) advanced further and closed its second consecutive week of gains, always underpinned by further conviction of a tighter-for-longer Federal Reserve and unabated uncertainty surrounding the Middle East crisis, with rumours of a US-Iran deal are still far from materialised.

The US Dollar Index (DXY) built on previous gains and kept the trade in the upper end of its weekly range, approaching the psychological 100.00 barrier. Looking ahead, the US markets will be closed on Monday 25 in observcance of the Memorial Day holiday. The FHFA’s House Price Index is due on May 26, alongside the Conference Board’s Consumer Confidence gauge. The API will release its weekly report on US crude inventories on May 27, seconded by the usual MBA Mortgage Applications release and the ADP Employment Change Weekly. On May 28 comes Durable Goods Orders, the second estimate of the Q1 GDP Growth Rate, Personal Income, Personal Spending, the PCE, New Home Sales, the usual weekly Initial Jobless Claims and the EIA’s weekly report on US crude oil stockpiles. Wrapping up the week, flash Trade Balance results are due on May 29, seconded by Wholesale Inventories and the Chicago PMI.

EUR/USD traded with a negative bias throughout the week, slipping back below the 1.1600 level to reach multi-week troughs. The ECB will publish its Accounts on May 28, followed by the final Consumer Confidence gauge and Consumer Inflation Expectations. Germany will release its labour market report on May 29 alongside the flash Inflation Rate in May.

GBP/USD managed to regain the 1.3400 region and end the week with decent gains, recovering from earlier lows near 1.3300 the figure. A very light UK calendar will show the BRC Shop Price Inflation on May 26 along with the CBI Distributive Trades. On May 29 will come the Nationwide Housing Prices.

USD/JPY advanced for the second week in a row, this time surpassing the 159.00 mark and opening the door to another challenge of the BoJ’s “land in the sand” above 160.00 sooner rather than later. The final Coincident and Leading Economic indexes are due on May 26. Housing Starts, Construction Orders and the weekly Foreign Bond Investnment figures are expected on May 28. Finally, the Unemployment Rate, Tokyo CPI, advanced Industrial Production prints, Retail Sales and the Consumer Confidence gauge are all due on May 29.

AUD/USD extended its correction for the second consecutive week, briefly breaching below the 0.7100 contention zone. The critical Inflation Rate is due on May 27, seconded by the Construction Work Done readings. Household Spending and the quarterly Private Capital Expenditure are next on May 28, while Housing Credit data and Private Sector Credit figures will close the domestic docket on May 29.

Anticipating economic perspectives: Voices on the horizon

• The RBA's Hauser speaks on May 27 seconded by the Fed’s Logan and the BoJ’s Ueda.
• The Fed’s Jefferson, Williams, Musalem and Goolsbee speak on May 28, seconded by the ECB’s Lane, Lagarde, Cipollone and Schnabel, and the BoE’s Lombardelli and Breeden.
• The BoE’s Bailey will speak on May 29, along with the Fed’s Bowman, Schmid and Paulson.
• On May 30, the BoE’s Mann is due to speak.

Central banks: Upcoming meetings to shape monetary policies

• The MNB will decide on rates on May 26 (6.25% act, 6.25% exp)
• The RBNZ meets on May 27 (2.25% act, 2.25% exp)
• The BoK will meet on May 28 (2.50% act, 2.50% exp)
• The SARB meets on May 29 (6.75% act, 6.75 % exp)