![\"\"](\"\/wp-content\/uploads\/2024\/05\/image-79.png\")
<\/figure>\n\n\n\nGBP \u2013 UK financial data to shake the pound<\/h2>\n\n\n\n
The pound is about to end the week stronger than the USD, the JPY and the EUR in a sign of relative strength. For pound traders, on a macroeconomic level, we note the slack in the UK employment market as dictated by the UK employment data for March, which were released last Tuesday. The unemployment rate ticked up, while the employment change figure dropped deeper into the negatives, albeit not as much as expected. In the coming week we highlight the release of the UK inflation metrics for April and expectations for further easing of inflationary pressures in the UK economy are present among market participants. Should the rates fail to slow down, or even accelerate, we may see the pound getting some support as BoE\u2019s narrative for further deceleration of the CPI rates will be contradicted and it would be adding more pressure on the bank to keep rates high. On an economic activity level, we note the release of the preliminary PMI figures for May with the UK services sector being eyed by the market, while the demand side of the UK economy is to be gauged by the release of the retail sales growth rate for April on Friday. On a monetary level, we note the market\u2019s expectations for a 25 basis points (bp) rate cut in the June meeting and should they be maintained we may see them weighing on the pound. On a fundamental level, the UK pre-election period is warming up with UK PM Rishi Sunak warning about the dangers ahead, yet the polls still show that Labour is leading.<\/p>\n\n\n\n The JPY is about to end the week relatively unchanged against the allready weak USD, but also the EUR and GBP in a sign of wider weakeness. Japan\u2019s macroeconomic outlook darkened after the release of the GDP rate for Q1. The release showed a wider-than-expected contraction of the Japanese economy at the rate of -2.0% yoy for the past quarter. The release highlighted the difficulties faced by the Japanese economy. Yet the release may have had a side-effect on a monetary level as well. The release implied that it may prove to be difficult for BoJ to proceed normalising further its monetary policy by hiking rates, as it may have an additional adverse effect on the growth of the Japanese economy. Yet we have to note that BoJ\u2019s mandate does not include promoting economic growth as such, yet given the close ties with the Japanese Government some difficulties towards more rate hikes may emerge. For the time being the market seems to expect the bank to proceed with another two 10 bp rate hikes within the year, starting in the July meeting. Yet JPY remains at rather week levels given the market sell-off it suffered three weeks ago. Hence in the coming week, we note the release of Japan\u2019s CPI rates for April, on Friday. Should the rates slow down the release may add more pressure on BoJ to remain on hold as there would be additional signs that inflation is easing. On a fundamental level, let\u2019s not forget that another market intervention by Japan to the Yen\u2019s rescue, is always possible should JPY slip even lower. Also on a fundamental level, we note JPY\u2019s dual nature as a safe haven and a national currency. Should the tensions in the US-Sino trade relationships escalate further we may see the Yen gaining some safe haven inflows.<\/p>\n\n\n\n The common currency is about to end the week in the greens against the USD and the JPY but not the pound. On a fundamental level, and despite not affecting the path of EUR prices, we note the assassination attempt on Slovakia\u2019s Prime Minister Robert Fico. Slovakia\u2019s Prime Minister is now described as being in a stable but critical condition after the shooting and a man was arrested and despite being considered as politically motivated was also described as a \u201clone wolf\u201d by media, containing the issue somewhat. Yet the assassination attempt as such tended to highlight the political polarisation within Europe as the victim was not in support of Ukraine, in contrast to EU\u2019s stance and in general seemd to be in odds with Brussells. The war continues to be a source of instability for the EU, on its southeastern flank and on a fundamental basis tends to be more of a burden for the EUR. Also, the nearing elections for the new EU Parliament, tend to provide some uncertainty for the path of the area ahead. On a monetary policy level, the market\u2019s expectations for the bank to start cutting rates in its June meeting seem to be present and tend to weigh on the EUR as the bank is expected by the market at the current stage to cut rates three times within the year. On a macroeconomic level, we note that in Germany the economic sentiment improved in the current month as did the conditions on the ground for the largest economy of the Eurozone. The GDP rate for Q1 remained unchanged in the positives, which was another positive for Eurozone\u2019s economy as it seems to avoid a possible recession. In the coming week, we intend to focus on the release of the preliminary PMI figures for May and especially the indicator for Germany\u2019s manufacturing sector, a sector that remains maybe the problem child of the Zone. Should the indicators show growth or a faster expansion of economic activity in the Eurozone, we may see the common currency getting some support.<\/p>\n\n\n\n AUD is about to end the week stronger than the USD. Yet the Aussie took a hit on Thursday\u2019s Asian session, as the release of Australia\u2019s employment data for April showed an unexpected rise of the unemployment rate to 4.1%. On the flip side, the employment change figure rose significantly and beyond market expectations reaching 38.5k easing the blow somewhat. The release tended to add more pressure on RBA to start cutting rates in order to ease the tight financial environment of Australia. Hence we expect Aussie traders to keep a close eye on the release of RBA\u2019s last meeting minutes. Should the document show some hesitation on behalf of the bank to maintain rates at high levels, then we may see the Aussie slipping while on the contrary should the document show that RBA policymakers continue to prioritise the curbing of inflationary pressures in the Australian economy and thus may keep rates at high levels, we may see AUD gaining some ground. On a more fundamental level, we note also the riskier nature of AUD as a commodity currency. Hence, should the market sentiment in the coming week turn more cautious we may see AUD slipping while a more risk-oriented market approach could benefit the Aussie. Also given the close economic ties between China and Australia, Aussie traders tend to keep a close eye on the release of Chinese data, like China\u2019s industrial output during today\u2019s Asian session. On a more fundamental level, the additional tariffs which are to be placed on imports from China by the US Government, could have an adverse on AUD in the coming week should tensions in the US-Sino relationship escalate further.<\/p>\n\n\n\n It was a rather easy going week for Loonie traders with fundamentals leading the way. Overall the improved market sentiment tended to support the risky commodity currency CAD and we expect that should the improved market sentiment be maintained in the coming week as well, we may see the CAD getting additional support. Also on a fundamental level, we note that oil prices seem to have remained rather rangebound in the past few days, which may have not been so helpful for the Loonie. Given Canada\u2019s status as a major oil-producing economy, should oil prices start rising we may see the Loonie also getting some support in the coming week. Main narratives surrounding the path of oil prices tend to include the mixed signals from the US oil market, the uncertainty on whether Iraq is to follow OPEC\u2019s voluntary oil production cuts and the different outlooks about oil demand at an international level, as provided by OPEC and IEA. On a macroeconomic level, we note the release of Canada\u2019s CPI rates for April on Friday and a possible acceleration of the rates could provide some support for the CAD as it could signal the persistence of inflationary pressures in the Canadian economy. In turn, such an acceleration could add more pressure on Bank of Canada and avoid any rate cuts.<\/p>\n\n\n\n As closure and in a more general note, we expect in the FX market the USD to ease further its influence over other currencies. In turn that may allow for a more balanced trading mix to emerge as other currencies may take the spotlight at certain points. On the other hand, US stock markets seem to have benefited from the improved market sentiment. It\u2019s characteristic that all three major US stock market indexes are about to end the week in the greens with some reaching new record high levels. The earnings season is slowly drawing to a close yet we would like to point out the release of Nvidia\u2019s (#NVDA) earnings report net Thursday that could generate considerable interest among traders. Should the positive market sentiment be maintained we may see additional support for US stock markets building up. Also, we note that the negative correlation of the USD with gold\u2019s price being present this week, given the weakening of the USD and the rise of the precious metal\u2019s price. We expect the negative correlation of the two trading instruments to be maintained and should the USD slip further, we may see gold\u2019s price getting additional support.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2024\/05\/image-80.png\")
<\/figure>\n\n\n\nJPY \u2013 Japan\u2019s April CPI rates eyed<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2024\/05\/image-81.png\")
<\/figure>\n\n\n\nEUR \u2013 May\u2019s Preliminary PMI figures in focus<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2024\/05\/image-82.png\")
<\/figure>\n\n\n\nAUD \u2013 Fundamentals to lead the Aussie<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2024\/05\/image-83.png\")
<\/figure>\n\n\n\nCAD \u2013 Canada\u2019s CPI rates could move the Loonie<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2024\/05\/image-84.png\")
<\/figure>\n\n\n\nGeneral Comment<\/h2>\n\n\n\n