Major Events of Last Week
The publication of a spate of disappointing economic indicators last week endorsed the growing viewpoint that the US economy is struggling to recover from a weak first quarter. Industrial production, inflationary data and retail sales all missed analysts’ expectations. Adding further to the gloom, another release disclosed that US Consumer Confidence plummeted to its lowest level in nearly seven month. On a more positive note, the European Central Bank advised that although it was satisfied with the impacts of its recently introduced bond buying program, it was not, however, contemplating any premature exit. The primary US indices produced a mixed reaction last Friday exemplified by the Dow Jones Industrial Average climbing just over 20 points; the S&P500 inching upwards by almost 2 points but the NASDAQ falling by nearly 3 points.
Investors continued to fret over the true health of the US economic recovery last week after US industrial production slumped during April for the fifth consecutive month. Specifically, output declined by 0.3% compared to market expectations of +0.1%. Economists summarized this development by advising that the recent string of weaker-than-expected indicators should now deter the US Federal Reserve from hiking interest rates too quickly. They also advised that the US economy continues to struggle after unexpectedly contracting during the first quarter of 2015.
This anxiety was enhanced even further after the University of Michigan presented a report demonstrating that US consumer sentiment had crashed to its lowest value since October 2014. The index declined from its prior reading of 95.9 in April to 88.6 this month. This poor performance surprised many analysts as they were anticipating that cheaper petroleum prices would inspire US households to boost their spending. They are now predicting US economic growth of just 2.5% for the second quarter of 2015, which pales badly against the 4.6% registered for the same period last year.
The European Central Bank (ECB) provided an update last Friday about its latest quantitative easing policy, which commenced in March. The ECB advised that it was so far more than satisfied by the positive impacts of its new bond buying program on the eurozone’s inflation rate and economy. The ECB commenced purchasing 60 billion euros of government bonds per month during March in an attempt to counter deflation and to boost a faltering economic performance. A prominent ECB official revealed that European banking facilities had already started to provide the region’s businesses with badly-needed credit. However, he also stressed that the ECB was not considering a premature exit for its new program.
If you’re looking for a great platform to trade, check out what traders think about PlusOption, one of our approved and reviewed brokers. Or try trade with extreme volatility and profit with bitcoin trading in real time.
What to Expect This Week
The major global zones will publish the following key economic data over the coming days
No important events are scheduled for Monday.
The Reserve Bank of Australia will launch Tuesday by presenting the minutes from its last policy meeting. If this report hints at any additional interest rate cuts, then expect the Australia Dollar to come under pressure. The United Kingdom will then disclose its Consumer Price Index for April. Recovering oil prices could generate a rebound. Next, Germany will reveal a major economic sentiment indicator, which is expected to extend recent losses. Later, the USA will post its Housing Starts and Building Permits for April. They are both predicted to bounce back from March’s dismal showings.
Wednesday should witness the pivotal event of the week when the US Federal Reserve publishes the minutes from its last Open Market Committee meeting. Investors will study this document carefully in order to gain any new insights into when the Fed will most likely hike interest rates.
China will commence Thursday by issuing the first reading of its Manufacturing PMI for May. Expert consensus is presently favoring a 49.5 result. The United Kingdom will then post its Retail Sales for April. Sterling could suffer if this indicator misses its +0.3% target. Later, the European Central Bank is scheduled to hold a forum during which a number of important delegates will deliver speeches. For instance, Mario Draghi, the ECB President, could introduce new policies at this event.
On Friday, the Bank of Japan (BoJ) will present its latest Monetary Policy Statement and conduct a supporting press conference. New Quantitative Easing Policies may be revealed in order to stimulate inflation and the Japanese economy. The USA will subsequently declare its Consumer Price Index for April which is expected to increase by 0.1%. Canada will complete the week by proclaiming its own CPI for last month. A weaker-than-expected result could exert pressure on the Canadian Dollar.
