Highlights of the coming week

FOMC protocols published last week showed that the regulator may soon begin discussions on reducing the volume of the asset buyback program as the economy recovers further. The process of curtailing stimulus measures by the Fed is at an early stage, but strong macroeconomic statistics and further inflation pressures may speed up a decision on this issue. This can significantly change the balance of power in both the foreign exchange and stock markets.

In this context, in the coming week, it is worth paying attention to the publication of new macroeconomic data from the United States. The price index of personal consumption expenditure (PCE), one of the indicators for estimating the level of inflation in the country, can have a strong impact on trading.

US – Conference Board Consumer Confidence Index

The consumer confidence index is an important leading indicator that shows the level of financial condition of consumers and the level of confidence in the economy.

Since December 2020, the US consumer confidence index has shown a steady upward trend. The rate of growth of the indicator significantly accelerated in March and April, when the economy intensified signs of recovery amid the active implementation of the vaccination program, reducing the incidence and easing, or abolishing, restrictive measures.

Now the indicator has reached the pre-crisis level, so in May experts expect a slight decrease in the indicator from 121.7 to 120.1 points. Stronger data could support the dollar.

New Zealand – RNBZ meeting and final regulator press conference

New Zealand’s economy continues to recover from the crisis, but is far from fully recovered. The actual indicators of inflation and employment are far from the target values, therefore, the regulator retains a soft approach to the implementation of monetary policy and so far does not intend to make changes.

Most likely, following the results of the meeting, the regulator will maintain the main parameters of monetary policy unchanged and will adhere to the mild rhetoric of statements, indicating continued uncertainty. The pigeon tone of RNBZ statements may put pressure on the New Zealand dollar.

US – Personal Consumption Cost Price Index (PCE)

The Personal Consumption Spending Price Index (PCE) is an important measure of US inflation. When making decisions on monetary policy, the Federal Reserve prefers to focus on PCE data rather than CPI.

Strong PCE growth could significantly affect investors’ expectations of further Fed plans to change monetary policy. Rising inflation may force the Fed to begin earlier curtailing stimulus measures.

The benchmark annual price index for personal consumption spending is expected to rise from 1.8% to 2.4%.

By Greg