Forecasting the Coming Week: Fedspeak and the BoE meeting come to the fore

Another dreadful week for the Greenback saw the USD Index (DXY) tumble to three-week lows well south of the 105.00 support, mainly in response to the dovish tone at the FOMC event and the softer-than-expected Nonfarm Payrolls in April. 

The US Dollar ended the week deeply in red territory, in line with the move lower in US yields across different time frames, although with a potential interest rate cut by the Fed in September as preferred by investors for the time being. Moving forward, the RCM/TIPP Economic Optimism Index is due on May 7 along with Consumer Credit Change. On May 8, come the weekly MBA’s Mortgage Applications and Wholesale Inventories, while Initial Jobless Claims are expected on May 9. Closing the week are the preliminary Michigan Consumer Sentiment and the Monthly Budget Statement.

EUR/USD advanced for its third week in a row, deriving renewed strength from the corrective pullback in the Greenback and the generalized better tone in the risk-associated universe. On May 6, the final HCOB Services PMI in both Germany and the broader euro area will come, ahead of Retail Sales in the bloc on May 7. On May 10, the focus of attention will be on the publication of the ECB’s Accounts.

GBP/USD added to the march north recorded in the previous week, although the move past the 1.2600 hurdle seen at the end of the week lacked follow-through. On May 7, the BRC Retail Sales Monitor will be released ahead of the S&P Global Construction PMI. May 9 will see the BoE meeting, while GDP figures, the Trade Balance, Industrial and Manufacturing Production, and the NIESR Monthly GDP Tracker are all expected at the end of the week.

USD/JPY sharply reversed four consecutive weekly advances and retreated to the sub-152.00 region against the backdrop of suspected FX intervention by the Japanese MoF. The domestic calendar includes weekly Foreign Bond Investment figures on May 6 ahead of the BoJ Summary of Opinions, Foreign Bond Investment, and the flash Coincident Index and Leading Economic Index, all expected on May 9. Finally, Household Spending, Bank Lending and the Eco Watchers Survey are due on May 10.

AUD/USD seems to have followed its own dynamics and clinched its second straight week of gains, coming in just short of the area of three-month tops. The RBA gathering due on May 7 will be the only release of note in Oz next week.

Anticipating Economic Perspectives: Voices on the Horizon

• Fed’s Goolsbee, Williams and Cook speak on May 4.
• Fed’s Williams and Barkin speaks on May 6 followed by ECB’s Nagel and SNB Jordan.
• Fed’s Kashkari and ECB’s Nagel speak on May 7.
• Fed’s Cook speaks on May 8.
• BoE’s Bailey and Pill are due to speak on May 9.
• BoE’s Pill speaks on May 10.

Central Banks: Upcoming Meetings to Shape Monetary Policies

• The BoE meets on May 9 and is widely anticipated to leave its policy rate unchanged.