Market Focus: Wall Street Anticipates Debt Ceiling Drama, Fed Speeches, Retail Earnings, and Bank Stress

　　

What happened in the market last week?

• The US Consumer Price Index (CPI) y/y figure eased from 5% to 4.9%, indicating a slight cooling off in inflationary pressures.
• US Unemployment Claims rose from 242k to 264k, providing relief to markets as a weaker labour market may result in a pause from the Fed’s next meeting.
• The Bank of England (BoE) hiked interest rates from 4.25% to 4.50% to tame inflation and signalled a willingness to continue raising rates if required.
• UK GDP m/m fell from 0.00% to -0.30%, indicating a setback and potential economic slowdown.
  
  

Source: VT Markets MT4

Last Week Market Pair Changes (All data is taken from the MT4 VT Markets)

• USOUSD decreased by 1.95% on a stronger dollar and demand fears.
• EURUSD decreased by 1.54%, while GBPUSD decreased by 1.41%.
• XAUUSD decreased by 0.32%.
• US stocks were mixed as the DJ30 decreased by 1.31%, while the NAS100 was able to hold ground and still increased by 0.44%.
• USDJPY increased by 0.74%. 
  
  

Source: VT Markets Economic Calendar

What to focus on this week?

This week, Wall Street focuses on debt ceiling drama, numerous Fed speeches, and crucial economic releases. The resuming debt ceiling talks raise concerns due to default risks and potential economic damage. 

Amid labour market issues and disinflationary trends, the Fed might hold interest rates longer than expected. Nine Fed officials, including Bostic and Goolsbee, will speak this week. Key releases include the Empire manufacturing survey, retail sales, jobless claims, and existing home sales data.

15 May 2023 | US NY Empire State Manufacturing Index 

The NY Empire State Manufacturing Index unexpectedly jumped to 10.8 in April 2023 from -24.6 in March 2023.

Analysts expect a reading of 8 for May 2023. 

Takeaways: Following last week’s inflation data impacting the US Dollar, this week begins with the US NY Empire State Manufacturing Index. The US Dollar is unlikely to see significant movement as the market awaits this week’s US retail sales data.

16 May 2023 | UK Claimant Count Change

The number of people claiming unemployment benefits in the UK rose by 28,200 in March 2023, the first increase in three months, and the biggest since February 2021. 

The UK Claimant Count Change for April will be released on 16 May, with analysts expecting a decrease of 15,000. 

Takeaways: The UK Claimant Count Change could drive market fluctuations as it reveals the number of people claiming unemployment benefits. A forecasted decrease of 15,000 may lead to an increase in GBPUSD value.

16 May 2023 | Canada Consumer Price Index 

Canada’s CPI increased by 0.5% in March 2023 compared to February 2023 figures. 

Data for April will be released on 16 May, with analysts expecting an increase of 0.3%. 

Takeaways: Canada’s Consumer Price Index data release will indicate the country’s inflation situation. If results align with forecasts, the Canadian Dollar (CAD) may experience a modest boost.

16 May 2023 | US Retail Sales

US retail sales dropped 0.6% in March 2023, after falling 0.7% in February 2023. 

Analysts project a 0.7% increase for April 2023, with the data set to be published on May 16.

Takeaways: US Retail sales data is a key market driver, and its release could significantly impact the US Dollar. If results align with forecasts, the US Dollar may see a substantial boost.

17 May 2023 | Australia Wage Price Index

Australia’s seasonally adjusted Wage Price Index jumped 3.3% year-on-year in Q4 2022, after an upwardly revised 3.2% growth in Q3 2022.

Data for Q1 2023 will be released on 17 May, with analysts expecting another increase of 3.5%.

Takeaways: The Australia Wage Price Index is anticipated to be a significant influence on the Australian Dollar this week. Should the data align with predictions, it is likely that the Australian Dollar will experience a modest increase.

18 May 2023 | Australia Employment Change

Australia’s employment rate increased to 13.88 million, with a surge of 53,000 in March 2023. The unemployment rate stood at 3.5%. 

The data for April 2023 is set to release on 18 May, with analysts expecting the employment rate to increase by 25,000. The unemployment rate is likely to remain at 3.5%.

Takeaways: The Australian employment and unemployment rate are expected to be key factors impacting the Australian Dollar this week. If outcomes correspond with projections, the Australian Dollar may see a minor uptick.