The foreign exchange market relatively mildly accepted information on the imposition of higher tariffs by the United States on Chinese products. It was a significant event for the stock market, while only the Japanese yen or the Australian dollar reacted more strongly on the currency market due to close trade links with China.
US actions may further escalate, as it has already announced the possibility of introducing tariffs on all Chinese products. Beijing has a month to deliver a new trade agreement. Otherwise, the conflict may escalate. Negotiations of representatives of the US and China are therefore one of the key events, but not the only one in this interesting week.
On Tuesday, we will get inflation data from Germany, which was to rise to 2% in April. It is also worth noting inflation data from Sweden - publication at 9:30. It is the Swedish or Norwegian currency that has recently reacted to macroeconomic publications in a more dynamic way. Tuesday will also bring important publications from the United Kingdom, where the topic of brexit has ceased for now. At 10:00 am, UK labor market data will be published, including the unemployment rate and the increase in wage growth.
On Wednesday, the decision and conference of the Polish Monetary Policy Council will take place. It seems that some members of the Council, fearing inflation increase, may start signaling the possibility of action earlier than announced by the President of the National Bank of Poland. Adam Glapiński was repeating all the time that it is unlikely that interest rates will be raised until the end of the term of office. Previous inflation data and high estimates of subsequent readings may be an excuse to open a new discussion on the abandonment of record low interest rates. Wednesday is also the day when we will get data on GDP and inflation from Poland.
When it comes to the United States, on Wednesday we will see a publication on retail sales. This may be one of the most interesting data from the US economy this week. Market expectations assume that in April sales increased in relation to March by 0.7 percent.
On Thursday at At 3:30 we will get data from the labor market in Australia. For a long time, the situation has been very good there, and any deterioration could have an impact on the RBA, which the market is already expecting to cut interest rates. On Friday there will be release of inflation data from the euro zone, which may barely exceed 1.5%. on an annual basis.
The macroeconomic calendar is therefore rich in publications for various economies, which may cause a slight increase in volatility on the main currency pairs.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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