Key Fundamental Factors this Week (5/11 – 5/14)

Key Fundamental Factors this Week (5/11 - 5/14)

Last week, USD had a mixed week, but was mostly lower. The US Non-Farm Payroll on Friday was slightly positive, but not enough to convince he market that the FOMC will be firm on a September rate hike. Thus, the greenback went into the weekend looking a bit vulnerable.

The RBA slashed its official cash rate, but the AUD brushed this off because for one it was expected, and also because it seems like there won’t be any more rate cut going forward. Let’s see what’s in store for us in terms of fundamental factors this week.

Monday 5/11 

BoE Monetary Policy Statement
Forecast: 0.50%; Asset Purchase Facility: 375B
Previous: 0.50%; Asset Purchase Facility: 375B
The Bank of England is expected to hold rates and maintain the pace of its asset purchase program. There has been a bit of a slowdown in Q1 of 2015, but the UK economy is expected to pick up. Inflation is expected to pick up as well since the slowdown was mainly due to the drastic drop in oil price, which has stabilized since March.

Tuesday 5/12

Manufacturing Production m/m (Mar.)
Forecast: 0.3%
Previous: 0.4%

RBNZ Financial Stability Report – RBNZ Governor will be holding a press conference. We know the central bank is open to a rate cut, but if Wheeler sounds optimistic, the RBNZ might simply hold rates.

Wednesday 5/13

German Preliminary GDP q/q (Q1)
Forecast: 0.5%
Previous: 0.7%
(click to enlarge; source:
Domestic demand boosted Q4 GDP. Q1 2015 growth is expected to be slower, around 0.5%. Germany is the engine of growth in Europe, so a strong trend can keep the ECB from implementing full QE, or convince it to shorten the span of stimulus.

Eurozone Flash GDP q/q (Q1)
Forecast: 0.5%
Previous: 0.3%

UK Average Earnings Index 3m/y (Mar.)
Forecast 1.7%
Previous: 1.7%
UK Claimant Count Change (Apr.)
Forecast: -20.1K
Previous: -20.7K
(click to enlarge; source:
Wage growth is expected to remain steady, but slightly low. Jobless claims has been declining nicely, and another good month is expected of April. The data points on the labor market this week should support the pound especially against the euro. Thus, look for downwards pressure on the EUR/GBP unless the jobs data falls drastically short of expectations.

BoE Inflation Report – The market will be monitoring the inflation report closely for clues on the BoE’s monetary policy stance. It seems like the bank has opened up the door for a rate cut, but is not walking through that door since data is starting to rebound. Inflation however is not expected to get back to target until at least 2016. Let’s see what the forecast is and whether the bank will swing back to at least a slightly hawkish stance.

US Retail Sales m/m (Apr.)
Forecast: 0.3%
Previous: 0.9%
(click to enlarge; source:
Core Retail Sales m/m (Apr.)
Forecast: 0.4%
Previous: 0.4%
Retail sales data have been disappointing at the turn of the year, with 3 consecutive negative readings. The March print restored some confidence. Demand is expected to be low again in April, but positive. Unless data surprises to the upside, near 1.0%, the retail sales print will only provide a small boost for the USD especially if it was sliding.

NZ Retail Sales q/q (Q1)
Forecast: 1.6%
Previous: 1.7%
Core Retail Sales q/q (Q1)
Forecast: 1.5%
Previous: 1.5%

Thursday 5/14

US PPI m/m (Apr.)
Forecast: 0.1%
Previous: 0.2%
(click to enlarge; source:
US Jobless Claims
Forecast: 271K
Previous: 265K
Inflation needs to pick up, and the labor market needs to continue improving if the FOMC is going to raise rates in September. So far, we have seen better jobs data after a slow Q1. However, inflation is still tepid and the PPI forecast is low and should keep pressure on the USD at least in the short-term.

Friday 5/15

Prelim UM Consumer Sentiment (May)
Forecast: 95.6
Previous: 95.9
(click to enlarge; source:
The continuation of elevated consumer sentiment is one of the reason the FOMC is not that concerned with the slowdown in Q1. The UM consumer sentiment reading for May is expected to be strong again, so even though other economic data might not help he USD strengthen,

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at