GLOBAL DATA FLOWS IN THE HEADLINES ON MONDAY
A steady stream of economic data will make its way through the financial markets on Monday, bringing into focus inflation and consumer spending from both sides of the Atlantic. Currency traders should expect significant action for US dollar pairs as a result.
Germany will kick off the release cycle with a report on retail sales at 06:00 GMT. Receipts at retail stores are forecast to rise 1% in March after declining 0.7% the previous month.
At 09:00 GMT, attention shifts to inflation data with Italy set to report on the April consumer price index (CPI). Three hours later, Germany will also issue its latest inflation report. The German consumer price index is forecast to rise 1.6% in the 12 months through April, unchanged from March. Germany’s harmonized index of consumer prices (HICP) likely rose 1.5% year-over-year.
Shifting gears to North America, the US Department of Commerce will report on personal income and outlays at 12:30 GMT. Personal income from all sources is projected to rise 0.4% in March, following an identical increase the month before. Personal spending is expected to rise by a similar amount following a 0.2% gain in March.
The same report will also contain the government’s most recent estimate of core personal consumption expenditures (PCE), the Federal Reserve’s preferred measure of inflation. The core PCE index is projected to rise 1.8% year-over-year, following an identical increase the month before.
Later in the morning, ISM-Chicago Inc. will release the April edition of the Chicago purchasing managers’ index (PMI). Fifteen minutes later, the National Association of Realtors (NAR) will report on pending home sales for March.
The Federal Reserve Bank of Dallas will wrap up the session with its latest manufacturing business index, which is scheduled for release at 14:30 GMT.
Europe’s common currency fell below 1.2100 US on Friday as the dollar extended its rally against a basket of global peers. EUR/USD has since regained that level and is now trading at 1.2123. However, upside momentum is severely limited as traders continue to monitor US inflation and interest rates.
Cable is coming off one of its worst weeks in recent memory, with prices falling to two-month lows on the major exchanges. GBP/USD was last seen trading at 1.3771, having declined a staggering 600 pips from the 17 April swing high. Immediate support is now located in the mid-1.3700 range.
After a choppy Friday session, the USD/JPY exchange rate is looking to regain its momentum at the start of the week. The pair is trading comfortably above 109.00 but faces fierce resistance in the mid-109.00 range. On the downside, buyers are likely to re-enter the market at price points below 108.65.