Highlights of the coming week
Published last week, CPI data in the United States significantly changed the balance of power in the market. The rapid rise in consumer prices again highlights the question of an earlier than expected curtailment of large-scale stimulus measures by the Fed.
The Federal Reserve tried to urgently calm the situation, saying that short-term price increases will not affect current monetary policy, but, obviously, in the near future, investors will continue to adjust their main positions taking into account new temporary expectations for tightening Fed policy.
In the coming week, investors will monitor the publication of CPI data in the EU and the UK. A significant increase in consumer prices may affect market expectations for a further strategy for the ECB and the Bank of England.
China - Publication of Industrial Production Data and NBS Press Conference
On Monday, the NBS of China will publish a number of important macroeconomic indicators, which will primarily affect the dynamics of the stock market.
The focus will be on industrial production data. Production growth is expected to be 9.8% in April. Due to the low base effect, actual key figure values can exceed the forecast. In this case, stock indices can get quite strong short-term support.
USA - Publishing FOMC Protocols
Most likely, investors will react rather restrained to the publication of FOMC protocols this week. The Fed meeting took place 2 weeks ago. After that, CPI data were published, which significantly changed investors' expectations and could affect the position of some Fed representatives regarding the further strategy for implementing monetary policy. The statements of the participants in the meeting were partially overtaken by events.
EU - CPI data
In the coming months, investors will closely monitor the publication of CPI data not only in the United States, but also in other countries. This is one of the key indicators that determines the strategy of the Central Bank.
Many investors expect signals from the ECB to reduce the volume of the asset buyback program. Strong inflation data can reinforce these expectations, which can provide significant support to the European currency.
According to forecasts, in April the annual consumer price index should grow from 1.3% to 1.6%.
EU - Preliminary PMI Data for Manufacturing and Services
Despite the current restrictive measures, economic activity in the EU countries continues to grow. PMI indices are held at historical highs. In May, some EU countries eased quarantine restrictions, which will have a positive impact on business activity, primarily in the service sector.
Against this background, you can expect the release of PMI data at the forecast level, or higher, which may support the European currency.