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This weeks key events: 3 Markets to watch this week 27-05-2024
BY Janne Muta
|May 27, 2024The Conference Board's Consumer Confidence Index on Tuesday is expected to dip slightly to 96.1 from 97, reflecting the easing inflation. The annual headline CPI was recently reported to tick down by 0.1% to 3.4%. At the same time, high interest rates (higher borrowing costs) impact spending. The labour market shows some signs of cooling, with only 175,000 new jobs created in April, contributing to consumer concerns about job security.
The Services PMI fell below 50 to 49.4, indicating a contraction in the service sector, which significantly influences consumer spending. Retail sales have also plateaued, indicating cooling demand. However, despite these concerns, the revised University of Michigan consumer sentiment exceeded expectations last week, suggesting some consumers remain optimistic.
Other data reported this week include Australian headline inflation and the German CPI on Wednesday. Australia reports CPI inflation rate with the analyst consensus projecting an easing 0.1% to 3.4%. A strong deviation from the expected number could create added volatility and trading opportunities.
Germany, the biggest economy in the EU is expected to report cooling in its monthly CPI inflation. Analyst consensus predicts the inflation rate to drop to 0.2% from 0.5%. EUR and Dax traders should follow the releases and the subsequent price action closely to see if trading opportunities arise.
US Preliminary GDP q/q on Thursday is forecasted to show an increase of 1.3%, down 0.3% from the prior rate (1.6% prior). Despite recent declines in inflation, higher interest rates persist. This impacts borrowing costs for consumers and businesses, leading to slower investment and spending.
On Friday the Bureau of Economic Analysis reports on the Fed’s favourite inflation gauge, the Core PCE. The monthly is expected to come in at: 0.2%, 0.3% prior. Analyst consensus expected a slightly lower reading due to inflationary pressures easing lately. According to Vanguard core inflation remains elevated but there are indications of a potential slowdown as supply chain disruptions ease and commodity prices stabilize. Retail sales volumes have also plateaued, indicating a cooling demand which can contribute to lower inflation.
Canadian economic growth is expected to slow down by 0.2% to 0.0% from a month before. However, this release takes place at the same time as the US Core PCE report which is the main focus of the USDCAD traders.
EURUSD
EURUSD has resumed the up trend after it attracted institutional buying near the 1.0800 - 1.0868 confluence area. This is where the SMA(50) and a market structure level are closely aligned. The market remains bullish above this level and could be soon retesting the 1.0885 resistance level. Below the confluence area a move to 1.0790 could be likely. The 4h chart shows EURUSD bouncing higher from 1.0842 and breaking higher but the next resistance level at 1.0863 is relatively close and could slow the market down today (note that it coincides with the 61.8% retracement level) as both the US and UK are observing market holidays.
AUDUSD
AUDUSD has broken out of a bullish trend channel and is once again trying to move higher. The market has however created a resistance area at 0.6646 – 0.6656 with the SMA(20) inside this range. The area is a key for the market moves this week. If the bulls can push above it and attract more buying above 0.6656 AUDUSD could soon test the 0.6685 resistance level. Alternatively, a failure to penetrate the confluence area would increase the probability of the market trading down to 0.6579 or so. Note that the moving averages (50 and 20 periods) indicate lack of momentum with the SMA(20) converging towards the slower SMA.
USDCAD
USDCAD tried to break out of a bearish trend channel but sellers pushed it back below the channel top. This means we now have a key resistance level at 1.3743 and the market could be trading toward the recent swing lows at the 1.3591 – 1.3615 range. Alternatively, if the market attracts buyers and creates a new swing low above this range, look for a move to levels near the 1.3743 resistance level. Note that the price of oil has been stabilising which could bolster the CAD bulls.
This weeks high impact market events
The following economic events and data releases have the potential to cause considerable price movements, thereby offering you both opportunities and risks. Stay informed and leverage our economic calendar to access real-time data and analysis as these key events unfold.
All times are GMT+3
Monday May 27th
Tuesday May 28th
Wednesday May 29th
Thursday May 30th
Friday May 31st
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Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.
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