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Since the end of 2022, the DXY dollar index has been trading in a range between 107.00 and 100.00, moving away and then again approaching one of its boundaries.
At the end of May 2024, DXY remains roughly in the upper half of this range and near 105.00. At the same time, the dollar and the DXY index still retain the potential for further growth, while the world’s largest central banks, including the Federal Reserve, are increasingly “focusing on inflation.” While with regard to the ECB and the Bank of England, market participants are pricing in a cut in their interest rates this summer, not everything is so clear with the Fed. According to Fed leaders, the latest inflation data does not yet indicate its stable slowdown. This means that the Fed will refrain from lowering interest rates for now. Gradually, the diverging conditional curves reflecting the dynamics of interest rates in the Federal Reserve and other major world central banks will also reflect the dynamics of the dollar relative to other major world currencies: it will strengthen, because the monetary policy of the Fed and other major world central banks will come to the fore.
In the meantime, market participants continue to analyze macro statistics coming from the United States and other countries with the largest economies.
In the week of 27.05.2024 – 02.06.2024, market participants will pay attention to the publication of important macro statistics from Australia, Germany, Switzerland, the US, Japan, China, the Eurozone, and Canada. The focus is on the US GDP data and PCE indices.
Note: During the coming week, new events may be added to the calendar and / or some scheduled events may be cancelled. GMT time
Monday, May 27
UK banks will be closed for the Spring Bank Holiday and trading volumes will be lower than usual. No important macro statistics is expected to be released. However, sections of the market that monitor yen quotes will pay attention to the speech at 00:05 (GMT) by the head of the Bank of Japan Kazuo Ueda. In his speech, he is likely to make some comments on the bank’s monetary policy. If he does not address this topic, then the market reaction to Ueda’s speech will be weak.
Tuesday, May 28
01:30 AUD Retail Sales Index
Retail Sales Index is published monthly by the Australian Bureau of Statistics and measures overall retail sales. The index is often considered an indicator of consumer confidence and consumer spending also reflecting the health of the retail sector in the near term. Domestic consumption, in turn, is one of the main components of GDP growth in countries with developed economies.
Therefore, a deterioration in this indicator may also indicate problems with the country’s GDP growth in the future. And this, in turn, is a negative factor for the national currency, since a slowdown in the economy may force the national central bank to soften monetary conditions for business, in particular, cut interest rates.
Index growth is usually a positive factor for the AUD.
Previous index value (for March) -0.4% (after +0.3% +1.1%, -2.7%, +2.0%, -0.4%, +0.9%, + 0.3%, +0.5%, -0.8%, +0.8%, 0%, +0.4%, +0.2%, +1.9%, -3.9%, +1.7%, +0.4%, +0.6%, +0.6%, +1.3%, +0.2% in previous months). If the data turns out to be weaker than the previous value, then the AUD may sharply decline in the short term; but if it’s above the previous values, the AUD is likely to strengthen.
04:55 CHF Speech by the head of the Swiss National Bank Thomas Jordan
During the speech of the head of the SNB Thomas Jordan, volatility in franc quotes increases and traders are waiting for signals regarding the SNB’s further monetary policy plans. The Central Bank of Switzerland has previously consistently advocated a soft monetary policy in the country and considered the exchange rate of the national currency to be “overvalued.” Now the situation is somewhat different, especially given the slowing inflation in the country.
Tough rhetoric of Jordan’s speech will help strengthen the franc. A soft tone of the speech and the SNB’s tendency to pursue a soft monetary policy will have a negative impact on the franc.
14:00 USD Consumer confidence level
The Conference Board survey report of nearly 3,000 US households asks respondents to assess current and future economic conditions, as well as the overall economic situation in the United States. American consumers’ confidence in the country’s economic development and the stability of their economic situation is a key indicator of consumer spending, which plays an important role in overall economic activity. A high level of consumer confidence indicates economic growth, while a low level indicates stagnation.
Previous indicator values: 97.0, 104.7, 106.7, 114.8, 110.7, 102.0, 102.6, 103.0, 106.1, 117.0, 109.7, 102, 3, 101.3, 104.2.
An increase in the indicator will support the dollar, while a decrease in the value will weaken it.
Wednesday, May 29
01:30 AUD Consumer price index
Consumer Price Inflation Index (CPI) published by the RBA and the Australian Bureau of Statistics measures the dynamics of retail prices of goods and services in Australia. CPI is the most significant indicator of inflation and changes in consumer preferences. A high value of the indicator is a positive factor for the AUD, and a low value is a negative factor. Previous values of the indicator: +3.5%, +3.4%, +3.4% (in January 2024).
The Australian central bank’s CPI inflation target is in the range of 2% – 3%. According to the minutes of one of the RBA’s most recent meetings, bringing inflation back to target may “require further interest rate increases over time” and “further steps will need to be taken in the coming months to normalize monetary conditions in Australia.”
It is worth noting that earlier the RBA minutes stated that “the Central Bank will not raise rates until it reaches the target CPI inflation level of 2-3% on a sustainable basis. This will not happen until 2024.” Now the RBA, like most of the world’s other major central banks, faces the challenge of high inflation.
The expected positive value is likely to support the AUD. If the indicator comes out with a value worse than the forecast, this will negatively affect the AUD in the short term.
12:00 EUR Consumer price indices. Harmonized Index of Consumer Prices (HICP) in Germany (preliminary estimate)
Consumer Price Index (CPI) reflects the dynamics of retail prices of the corresponding basket of goods and services, and the core indicator (Core CPI) does not take into account fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transport and tobacco products. The ECB’s inflation target is 2%. An increase in the CPI indicator is a harbinger of a rate increase and a positive factor for the EUR.
Previous values of the Consumer Price Index CPI: 0.5% (+2.2% in annual terms), +0.4% (+2.2% in annual terms), +0.4% (+2.5% in annual terms), +0.2% and +2.9% in annual terms (in January 2024).
If the expected data turns out to be worse than previous values, this will negatively affect the EUR. Data better than previous values will strengthen the euro.
Harmonized Index of Consumer Prices (HICP) is published by the EU Statistics Office and is calculated based on a statistical method agreed between all EU countries. It is an indicator for assessing inflation and is used by the Governing Council of the ECB to assess the level of price stability. A positive result strengthens the EUR, a negative result weakens it.
Previous indicator values: +2.4%, +2.3%, +2.7%, +3.1% in January 2024, +3.8% in December, +2.3% in November, +3 .0% in October, +4.3% in September, +6.4% in August, +6.5% in July, +6.8% in June, +6.3% in May, +7.6 % in April, +7.8% in March, +9.3% in February, +9.2% in January, +9.6% in December, +11.3% in November, +11.6% in October, +10.9% in September, +8.8% in August, +8.5% in July, +8.2% in June, +8.7% in May, +7.8% in April, +7.6% in March, +5.5% in February, +5.1% in January 2022 (annualized).
The data suggests inflation in Germany continues to slow, albeit at a slower-than-expected pace, which in turn puts pressure on the ECB to ease its monetary policy. Data weaker than the previous value will likely have a negative impact on the euro. And, conversely, the resumption of inflation growth may provoke a strengthening of the euro. The growth of the indicator is a positive factor for the euro.
If data for May turns out to be better than previous values, the euro may strengthen in the short term.
Thursday, May 30
00:00 CHF Speech by the head of the Swiss National Bank Thomas Jordan
During the speech of the head of the SNB Thomas Jordan, volatility in franc quotes increases and traders are waiting for signals regarding the SNB’s further monetary policy plans. The Central Bank of Switzerland has previously consistently advocated a soft monetary policy in the country and considered the exchange rate of the national currency to be “overvalued.” Now the situation is somewhat different, especially given the slowing inflation in the country.
Tough rhetoric of Jordan’s speech will help strengthen the franc. A soft tone of the speech and the SNB’s tendency to pursue a soft monetary policy will have a negative impact on the franc.
02:00 NZD New Zealand budget release
The New Zealand Treasury is to release preliminary budget for next year.
The publication of the New Zealand budget provides information on the income and expenses of all departments, ministries, services, and government programs for the upcoming financial year. An increase in indicators may have a positive impact on the NZD quotes.
07:00 CHF Swiss GDP for the 1st quarter of 2024
GDP is considered an indicator of the overall health of a country’s economy and assesses its rate of growth or decline. The Gross Domestic Product report expresses in monetary terms the total value of all final goods and services produced by Switzerland over a given period of time. A rising trend in the GDP indicator is considered a positive factor for the national currency (franc), while a low result is considered negative (or bearish).
Previous Swiss GDP values: +0.3% (+0.6% annualized) in the 4th quarter of 2023, +0.3% (+0.3% annualized) in the 3rd quarter, 0% (+0.5% annualized) in the 2nd quarter, +0.3% (+0.6% annualized) in the 1st quarter of 2023.
Data point to the continued recovery of the Swiss economy, although still at a slow pace, and this is a positive factor for the franc.
If the data turns out to be weaker than expected, the franc may decline in the short term. However, one should not expect a strong fall in the franc, since it is in active demand as a protective asset. Better-than-forecast data could strengthen the franc in the short term.
12:30 USD US annual GDP for 1st quarter (second estimate)
GDP data is one of the key data (along with labor market and inflation data) for the Fed in terms of its monetary policy. The strong result strengthens the US dollar; a weak GDP report has a negative impact on the US dollar. In the previous 4th quarter of 2023, GDP grew by +3.4%, after growth of +4.9%, +2.1% in the 2nd quarter, +2.0%, +2.6%, + 3.2% in Q3 2022, down -0.6% in Q2, -1.6% in Q1, up +6.9% in Q4 2021 , +2.3% in the 3rd quarter, in the 2nd quarter, GDP grew by +6.7%, in the 1st quarter of 2021 – by +6.3%.
If data points to a contraction in GDP in the first quarter of 2024, the dollar will come under severe pressure. Positive GDP data will support the dollar and US stock indices.
The first estimate was +1.6%.
18:50 GBP Speech by head of the Bank of England Andrew Bailey
Financial market participants are expecting Andrew Bailey to clarify the situation regarding the future policy of the UK central bank. Volatility usually rises sharply in the pound and the London FTSE index during a speech by the head of the Bank of England if he gives any hints about tightening or easing the monetary policy of the Bank of England. It is likely that Andrew Bailey will also provide explanations regarding the Bank of England’s decision on the interest rate and will touch upon the state and prospects of the British economy against the backdrop of high energy prices and inflation. If Bailey does not touch on monetary policy issues, then the reaction to his speech will be weak.
23:00 NZD Speech by head of the RBNZ Adrian Orr
Speeches by the head of the RBNZ often serve as an unofficial source of information about the future direction of the central bank’s monetary policy. It is likely that head of the RBNZ Adrian Orr will reaffirm the bank’s penchant for pursuing tight monetary policy to curb high inflation unwilling to fall towards the target range between 1.0% and 3.0%, which could support the New Zealand dollar. A soft rhetoric of his statements will cause continued pressure on the New Zealand currency.
23:30 JPY Consumer Price Index (CPI) in the Tokyo region. Core Consumer Price Index (Core CPI) in the Tokyo region (ex food and energy prices)
Tokyo Consumer Price Indices are published by the Japan Bureau of Statistics and measure changes in the prices of a selected basket of goods and services over a given period. They are a key indicator for assessing inflation and changes in consumer preferences.
Previous values (annualized):
- Tokyo CPI: +1.8%, +2.6%, +2.6%, +1.6%, +2.4%, +2.6%, +3.3%, +2.8%, +2.9%, +3.2%, +3.2%, +3.2%, +3.5%, +3.3%, + 3.4%, +4.4% (in January 2023),
- Tokyo CPI (ex food and energy): +1.8%, +2.9%, +3.1%, +3.1%, +3.5%, +3.6%, +3 ,8%, +4.0%, +4.0%, +4.0%, +3.8%, +3.9%, +3.8%, +3.4%, +3.1 %, +3.0% (in January 2023).
An indicator value below the forecast and/or previous values may trigger a weakening of the yen.
Friday, May 31
01:30 CNY Manufacturing and Services PMIs of the Chinese economy from the China Federation of Logistics and Purchasing (CFLP)
This indicator is an important indicator of the state of the Chinese economy as a whole. A result above 50 is considered as positive and strengthens the CNY, while a result below 50 is negative for the yuan.
Previous values: 50.4, 50.8, 49.2, 49.0, 49.5, 50.2, 49.3, 49.0, 48.8, 49.2, 51.9, 52.6 , 50.1 in January. The relative growth of the index and the value of 50 should have a positive impact on the CNY. Data above 50 indicates an increase in activity, which has a positive effect on the quotes of the national currency. Otherwise, and if the indicator is below 50, the yuan will be under pressure and will likely decline.
A similar PMI in the services sector assesses the state of the services sector in the Chinese economy. A result above 50 is considered positive and strengthens the yuan. Previous values: 51.2, 53.0, 50.7, 50.4, 50.6, 51.7, 51.5, 53.2, 54.5, 56.4, 58.2, 56.3 , 54.4 in January. Despite the relative decline, the indicator is still above 50, which is likely to have a positive impact on the yuan quotes. Otherwise, and if the indicator is below 50, the yuan will be under pressure and will likely decline.
06:00 EURRetail sales
Retail sales are the main indicator of consumer spending in Germany showing changes in the volume of sales in the retail sector. A high result strengthens the euro, and vice versa, a low result weakens it.
Previous values: +1.8% (+0.3% in annual terms), -1.9% (-2.7% in annual terms), -0.4% (-1.4% in annual terms) in January 2024, -1.6% (-1.7% in annual terms), -2.5% (-2.4% in annual terms), +1.1% (-0.1% in annual terms), -0.8% (-4.3% in annual terms), -1.2% (-2.3% in annual terms), -0.8% (-2.2% in annual terms) , -0.8% (-1.6% in annual terms), +0.4% (-2.1% in annual terms), +0.8% (-4.3% in annual terms), – 2.4% (-8.6% in annual terms), -1.3% (-7.1% in annual terms), -0.3% (-3.8% in annual terms in January 2023) .
The data shows an uneven recovery and, in some months, a slowdown in this sector of the German economy. Data better than the forecast and/or the previous value will likely have a positive impact on the euro, but in the short term.
09:00 EUR Consumer Price Index. Core Consumer Price Index (preliminary release)
Consumer Price Index (CPI) is published by Eurostat and measures changes in the prices of a selected basket of goods and services over a given period. The index is a key indicator for assessing inflation and changes in consumer preferences. A positive result strengthens the EUR, a negative result weakens it.
Previous values (in annual terms): +2.4%, +2.4%, +2.6%, +2.8% (in January 2024), +2.9%, +2.4%, +2.9%, +4.3%, +5.2%, +5.3%, +5.5%, +6.1%, +6.1%, +7.0%, +6 .9%, +8.5%, +8.6% (in January 2023), +9.2%, +10.1%, +10.6%, +9.9%, +9.1 %, +8.9%, +8.6%, +8.1%, +7.4%, +7.4%, +5.9%, +5.1% (in January 2022).
If the data turns out to be worse than forecast, the euro may decline sharply in the short term. Data better than the forecast and/or the previous value may strengthen the euro in the short term. Recall that the ECB’s consumer inflation target is just below 2.0%, and data indicate that inflation in the Eurozone is still high, although there is also a slowing down trend.
Core Consumer Price Index (Core CPI) determines the change in prices of a selected basket of goods and services for a given period and is a key indicator for assessing inflation and changes in consumer preferences. Food and energy are excluded from this indicator to provide a more accurate estimate. A high result strengthens the EUR, while a low result weakens it.
Previous values (annualized): +2.7%, +2.9%, +3.1%, +3.3% (in January 2024), +3.4%, +3.6% + 4.2%, +4.5%, +5.3%, +5.5%, +5.5%, +5.3%, +5.3%, +5.6%, +5, 7%, +5.6%, +5.3%, +5.2%, +5.0%, +5.0%, +4.8%, +4.3%, +4.0% , +3.7%, +3.8%, +3.5%, +3.0%, +2.7%, +2.3% (in January 2022).
If the data for May 2024 turn out to be weaker than the previous value or forecast, this could have a negative impact on the euro. If the data turns out to be better than the forecast or the previous value, then the euro will most likely react with an increase in quotations.
Judging by the data presented, inflation in the Eurozone is slowing down, although still at a very slow pace, and this is a negative (in normal economic conditions) factor for the euro.
12:30 CAD Canada GDP. Canada’s annual GDP data
Canada’s GDP report is published by Statistics Canada. A strong report will strengthen the CAD. A weak GDP report will have a negative impact on the CAD. The previous report showed Canadian GDP growth of +0.2% (in February 2024).
Canada’s quarterly GDP report reflects the total volume of all goods and services produced by Canada in a quarter (annualized) and is considered an indicator of the overall health of the Canadian economy. In the previous 4th quarter of 2024, GDP grew by +0.2% (+1.0% annualized) after declining by -0.3% (-1.1% annualized) in the 3rd quarter. -0.2% in Q2, +2.6% growth in Q1 2023, zero growth in Q4, +2.9% growth in Q3 2022, + 3.3% in the 2nd quarter of 2022, +3.1% in the 1st quarter of 2022 (in annual terms).
If the data for the 1st quarter of 2024 turns out to be stronger than the previous value and/or forecast, then the CAD will strengthen.
12:30 USD Personal Consumption Expenditures (PCE Core Price Index)
Personal consumption expenditure data measures the average amount of money consumers spend per month on durable goods, consumer goods, and services. Core PCE price index does not include food and energy prices. Annual Core PCE is the Fed’s main measure of inflation.
In turn, the inflation rate (in addition to data from the labor market and GDP) is important for the Fed when determining the parameters of its monetary policy. Rising prices put pressure on the central bank to tighten its policy and raise interest rates.
PCE data above the forecast and/or previous values could push the US dollar higher, while a decrease in the indicator would most likely have a negative impact on the dollar.
Previous values (annualized): +2.8%, +2.8%, +2.9% (in January 2024), +2.9%, +3.2%, +3.5%, +3.7%, +3.8%, +4.3%, +4.3% +4.7%, +4.8%, +4.8%, +4.7%, +4, 7%, +4.6%, +4.8%, +5.1%, +5.2%, +4.9%, +4.7%, +4.8%, +4.7% , +4.9%, +5.2%, +5.3%, +5.2% (in January 2022).
Price chart of USDX in real time mode
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