Market Review: USA April Retail Sales
Economic calendar (highest volatility): 14th May– 18th May 2018:
Timezone: (GMT -5:00) Eastern Time (U.S & Canada), Bogota, Lima
In the previous week, we recap on the April 2018 United States (U.S) Core Consumer Price Index (CPI) release which recorded lower compared to forecast at 2.1% (Forecast: 2.2%). The team here at FintechFX notes that although this figure falls a little short compared to market expectations, it still hovers above of the target 2% mark indicating a strong potential that the U.S Federal Open Market Committee (FOMC) are well on track of implementing further Interest Rate hikes. At the start of the year, U.S Federal Reserve Chairman Jerome Powell indicated that the FOMC could see as many as four Interest Rate hikes this year. In the last FOMC meeting held earlier this month, the benchmark U.S Interest Rate was left unchanged. This indicates for a stronger possibility of an Interest Rate hike to take place during the June 2018 meeting as inflation levels continue to pace ahead of the 2% mark. Nonetheless, we note that U.S President Trump's ‘protectionist’ stance and hovering 'geopolitical' issues stand to deter our views. Formerly, U.S President Trump signed a memorandum imposing wide-ranging tariffs of up to U.S$60 billion on China; following previously imposed tariffs on steel and aluminium imports. China has since retaliated with the introduction of it's own tariffs on imports of 128 U.S products. Following this, U.S President Trump further rattled markets by announcing the possibility of an additional U.S$100 billion worth of tariffs to be imposed against China. There is now fresh speculation for U.S President Trump to revive the Trans-Pacific Partnership (TPP) to enact further pressure on China. Meanwhile, U.S President Trump is scheduled to meet North Korean President Kim Jong-un in Singapore this 12th June 2018. The U.S Dollar (USD) seems to be somewhat sustaining in value as reflected by the U.S Dollar Index (DX) which continues to range around the 92 level.
This week, the the team here at FintechFX views the U.S April 2018 Retail Sales release to bring about the most volatility. There is some expectation that this figure will turn out to be better than expected following a sustained inflation level. Canada will also release their March 2018 Retail Sales numbers towards the end of the week. Meanwhile although not making much of a highligh in the economic calendar, the team views the European First Quarter (Q1) Gross Domestic Product (GDP) release and the German April 2018 CPI release if largely positive, could be a 'dark horse' which could bring about major volatility for the week as European Central Bank's (ECB) President Draghi is scheduled to speak after these releases. President Draghi's narrative could indicate on the end of the ECB's asset purchasing programme as well as indicate a clearer timeline for an Interest Rate hike.
This week, the AUD/USD presents traders with some trading volatility as there stands to be three crucial AUD related data scheduled for release namely the Australian Monetary Policy Meeting Minutes, the Australian Wage Price Index, and Australian related Employment / Unemployment data. The Australian Dollar (AUD) in our opinion, is still highly undervalued and shows some signs of rising this 2018. In the light of a potentially more hawkish statement moving forward, markets are looking at the AUD/USD to regain some of it's strength which has been lost throughout the years. Therefore for this week, the team here at FintechFX view some opportunity to buy the AUD/USD once it test the key multi-year low support level.
This week, the EUR/USD will certainly be subjected to some degree of volatility given the upcoming European First Quarter (Q1) Gross Domestic Product (GDP) release and the European April 2018 CPI release. The ECB's President Draghi is scheduled to speak after these releases which leads to some speculation that he could present the market with additional cues on the timing of when the ECB's asset purchasing programme is scheduled to end as well as indicate a clearer timeline for an Interest Rate hike. The chart below is indicative on whether Draghi does or does not present the market with a solid directional trading cue.
Source (Charts): https://www.investing.com
Source (Economic Calendar): https://www.forexfactory.com/calendar.php
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