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European FX Outlook: The UK wage growth in the spotlight

Written by By Mario Blascak, PhD | 2018-05-15 06:00:00 GMT
  • With no macro data scheduled for Monday, the speeches from the Federal Reserve Bank and the ECB officials failed to spur major FX market action.
  • Italian populist government of Five Star movement and the League proposes 15% flat tax rate introduction for the public debt and public deficit-ridden country.
  • The US and China are set to resume trade negotiations this week, but according to the US ambassador to China Terry Branstad, the views are “very distant”.
  • The UK labor market report will see the unemployment steady at 1975 lows, but the wage growth is set to decide on the direction of Sterling. For details of how to trade the UK wage growth report with GBP/USD, click here.
  • The US retail sales are expected to rise modestly in support of the US Dollar. 

Monday’s market moving events

  • China’s industrial production accelerated to 7.0% y/y in April.
  • German Q1 GDP is expected to rise 0.4% Q/Q while rising 2.4% y/y.
  • French CPI is expected to rise 1.8% y/y in April.
  • The UK wages excluding bonuses are expected to rise 2.9% y/y and decelerate to 2.6% y/y including bonuses in three months to March. For details read my Preview here.
  • German ZEW index of investors sentiment is expected to remain unchanged at -8.2 in May after falling sharply in previous two months. For detail read my analysis here.
  • UK parliament holds Inflation Report hearing hosting the Bank of England officials including Governor Mark Carney.
  • The Eurozone GDP is expected to rise 0.4% Q/Q while increasing 2.5% y/y.
  • The Eurozone industrial production is forecast to rise 0.6% m/m while increasing 3.7% y/y in March.
  • The New York Empire State manufacturing index is seen decelerating to 15.0 in April.
  • The US core retail sales are expected to rise 0.5% m/m in April while control group included in US GDP report is expected to rise 0.4% m/m. For detail read Yohay’s Preview here
  • San Francisco Federal Reserve Bank President John Williams is scheduled to speak at the Economic Club of Minnesota in Minneapolis at 17:00 GMT.

Major market movers

  • The US Dollar saw another consolidation date on Mondayday with the major currencies.
  • Watch GBP for reaction to the UK wage growth in March and read about how to trade it with GBP/USD here
  • The US Dollar will be in the spotlight with the release of the US retail sales in April.

 Monday’s macro summary

  • Cleveland Federal Reserve Bank President Loretta Mester said that she doesn't expect inflation to pick up sharply in the US reaching Fed's symmetric goal of 2% on the sustainable basis over next one to two years. Mester said her estimate of the longer-run nominal Fed funds rate is 3% as the impact of the US tax cuts and government spending on the economy is still uncertain.
  • ECB executive board member Yves Mersch said authorities should pay close attention to mitigating the potential risks that could stem from a growing virtual currency market
  • ECB executive board member Sabine Lautenschläger delivered a speech at Copenhagen University in Denmark emphasizing the importance of education.
  • ECB chief economist Peter Praet participates at the lunchtime MNI Connect Roundtable in London at 11:45 GMT.
  • St. Louis Federal Reserve Bank President James Bullard said cryptocurrencies are creating drift toward a "non-uniform currency" in the US moving current US currency system toward one similar to international non-uniform currency system with greater volatility.


By Mario Blascak, PhD

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