Major Events of Last Week
The US Commerce Department posted data last week disclosing that ‘Retail Sales’ surged 1.3% during last month by growing at its fastest pace since the spring of 2015. This impressive figure can best be placed into contrast by comparing it to March’s reading of -0.4% and analysts’ April forecasts of +0.8%. After carefully studying the details of this release, prominent economists subsequently advised that this encouraging performance definitely added credence to the viewpoint that US economic growth is now acquiring traction after stalling badly during the first three months of 2016.
OPEC cautioned last week that oil supplies from its member nations were still increasing after critical talks to limit production collapsed during April. This body also identified the lifting of Iranian sanctions as another major force fueling this worrisome development. A recent report emphasized the scope of this problem by revealing that just over 32 million barrels (bpd) were pumped daily during last month registering a 190,000 bpd increase over March. OPEC proceeded to stress that oil output is now expected to remain high and that an oversupply status will persist throughout this year. Consequently, investors should expect oil prices to be pressurized for the foreseeable future.
Christine Lagarde, the Head of the International Monetary Fund (IMF), expounded last Friday that a Brexit could produce dire economic consequences for Britain, the Eurozone and the global financial markets ranging from ‘bad to extremely bad’. She then stressed that the United Kingdom, in particular, could experience declining house prices, a deteriorating economic environment and reducing foreign investment should June’s referendum return an ‘exit’ vote. Such an outcome could initiate a prolonged period of market volatility and increased investor anxiety.
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What to Expect This Week
No major global events or data releases are scheduled for Monday.
On Tuesday, Great Britain will present key inflationary data. Consumer Price Index (CPI) is forecasted to hover about its recent 0.4% mark while Producers Price Index (PPI) should beat last month’s 0.3%. Later, the USA will disclose a spate of important economic indicators. ‘Housing Starts’ must surpass its previous figure of 1.089 million units in order to bolster investor sentiment. Expert consensus hopes for a better-than-expected CPI in order to support additional interest rate hikes by the US Federal Reserve later this year.
Finally, ‘Industrial Production’ should stage a recovery from March’s worrisome -0.6% result in order to confirm that US manufacturing output is finally emerging from the mire. Japan will complete the session by revealing its Gross Domestic Product for the first quarter of 2016. This parameter needs to rebound from its prior value of -0.3% to visibly demonstrate that the current monetary easing policies of the Bank of Japan (BoJ) are beginning to bear fruit.
The United Kingdom will also launch Wednesday by publishing its labor report for last month. British employers are anticipated to have created nearly 7,000 new jobs during April. The pivotal event of the week will then occur when the FED publishes the minutes from the last meeting of the Federal Open Market Committee (FOMC). Economists will thoroughly scrutinize this document in order to glean any new knowledge detailing exactly how many interest rate hikes the Fed now will instigate during 2016. Australia will finish the day by posting its labor report for last month which should extend its recent growth trend once again.
On Thursday, the United Kingdom will issue its ‘Retail Sales’ result for last month which will provide a fresh overview of the current psychology of the British consumer. If March’s disappointing figure of -1.3% is not surpassed, then Sterling could come under extensive pressure. The USA will then declare a prominent Business Outlook Survey and its ‘Jobless Claims for the week ending 8th May. The former is expected to rally from its previous weak reading of -1.6 while investors will be keen to learn if the latter surges higher for the second consecutive week.
The USA will announce its ‘Existing Homes’ for last month on Friday. A strong print above March’s 5.33 million units is required in order to boost trader sentiment and provide the US Dollar with fresh impetus.
