- Wednesday is packed with the most important macroeconomic events this week including the FOMC minutes
- A regional survey from Chicago is the sole noteworthy reading for today
- Several central bankers are scheduled to speak as well (most of them from the Fed)
It is not common to have all the major FX events packed into one day but that’s the case this week. Key macroeconomic data in Europe and FOMC minutes could be a driving force for major currency pairs this Wednesday. Before this day let’s keep an eye on today’s calendar even as it stacks up quite poor against Wednesday’s events. Cutting to the chase, the one and only print for today is the Chicago Fed national activity index where market participants expect a bounce to 0.48 points in April from 0.1 previously. It tends to be a good proxy for Chicago PMI and tell us a bit more about economic conditions in this industrial city. Let’s also add that after fairly weak April regional surveys from New York and Philadelphia improved in May reflecting a constantly sound economic environment for industrial firm.
Central bank speakers for today:
- 8:00 am BST – ECB’s Nowotny
- 11:30 am BST – Riksbank’s Jansson
- 5:15 pm BST – Fed’s Bostic
- 7:05 pm BST – Fed’s Harker
- 10:30 pm BST – Fed’s Kashkari
What to watch for the remainder of the week?
FOMC minutes (Wednesday, 7pm GMT): Treasury bond yields keep grinding higher as $70+ WTI prices spell higher inflation in the United States. The Fed is nearly bound to raise rates in June against the back but is it ready to signal more tightening? The June meeting will be crucial but minutes may provide some hints. A further rise in US bond yields could not only help USD but act against emerging currencies. Affected markets: USDJPY, US500.
UK inflation data (Wednesday, 9:30am GMT): The Bank of England withdrew the only major reason for traders to be bullish GBP and we can see a lot of weakness on the pound. But could it get worse? A lot will depend on inflation that was at 2.5% in March for headline and 2.3% for the core measure. Data for April will be presented this Wednesday. Do notice that a weak pound helped propel UK100 towards fresh highs. Affected markets: GBPUSD, UK100.
EMU flash PMIs (Wednesday, 8 to 9am GMT): The European recovery was so robust in 2017 that a minor pullback in the PMIs at the beginning of 2018 was met with understanding. However, enough is enough! The manufacturing PMI slid for the 4th month in April and non-manufacturing one for the 3rd – bot erased much of the 2017 improvement. A further deceleration now when higher oil prices shouldn’t have yet caused damage, would be a serious warning signal and a question mark over monetary policy normalization. The reports will be closely watched. Affected markets: EURUSD, DE30.