A slow start to the week will see the pace pick up steam as the markets prepare for Tuesday’s inflation data followed by Wednesday’s FOMC meeting minutes from the April Fed meeting.
The US dollar closed Friday on a strong note following the release of the retail sales data. After the release which showed US retail sales rising at the fastest pace in a year at 0.80% excluding autos, the dollar slipped in late Friday trading but still managed to close in the positive. The better than expected retail sales numbers prompted the Atlanta Fed’s GDPNow model to forecast Q2 US GDP at 2.80%. Meanwhile, the NY Fed’s Nowcast saw a more modest increase to 1.20% for the second quarter.
US Q2 GDP Forecasts (Atlanta Fed & NY Fed)
On Monday, the dollar index was seen trading weaker across the board after China’s industrial production and retail sales disappointed. For April, industrial production increased at a slower pace, rising 6.0% down from 6.80% in March and below estimates of 6.50% increase. Retail sales data was also soft, rising 10.10% in April easing off from 10.50% growth seen in March. A modest risk off sentiment saw gold prices seeking early gains while the yen was mostly subdued. Gold prices briefly tested session highs of 1283.98.
On Tuesday, US Consumer Price Index is expected to show a 0.40% increase in April, extending March’s 0.10% increase while on a year over year basis, CPI is expected to rise 1.0%, up from 0.90% previously. Excluding food and energy, CPI is expected to rise 0.40% on the month on month basis while it is forecasted to remain steady at 2.20%, rising at the same pace as in March on a yearly basis.
Following the inflation data, housing starts, building permits will be released which is expected to see a recovery, rising 3.30% and 5.50% respectively in April. US industrial production is also estimated to have increased 0.30% in April after a 0.60% decline in March. Regardless of how good the data may be, the US FOMC meeting minutes will however likely overshadow the data.
