Markets Report - 22 May 2023

A daily breakdown of the markets for the 15th May 2023, provided to you by Sterlex.

🇪🇺💶EUR/USD fades the initial uptick to the 1.0830 region against the backdrop of the generalized lack of direction in the global markets at the beginning of the week. In the docket, the European Commission (EC) will publish its Consumer Confidence gauge for the month of May, while speeches by Fed’s Williams, Bullard and Bostic are only due across the pond. The European currency, in the meantime, remains under scrutiny on the back of now shrinking hawkishness from some members of the ECB Board ahead of the next event in June, where a 25 bps rate hike appears well anticipated.

Key events in the euro area this week: EC Flash Consumer Confidence (Monday) – Germany, EMU Advanced Manufacturing/Services PMI (Tuesday) – Germany IFO Business Climate (Wednesday) – Germany Final Q1 GDP Growth Rate, GfK Consumer Confidence (Thursday) – Italy, France Consumer Confidence (Friday).

🇬🇧💷The UK inflation is still in the double-digit figure led by historic high food inflation and labor shortage due to early retirement. Out of the G7 economies, the United Kingdom economy seems to be the laggard that has failed in bringing down inflation. Bank of England Governor Andrew Bailey has already conveyed that they underestimated the strength and persistence of inflation. This would also undermine the promise by UK Prime Minister Rishi Sunak of halving the inflation pressures by the end of CY2023. Last week, UK Finance Minister Jeremy Hunt promised a decline in tax burden from households, which would fuel retail demand further.

🇺🇸 🏦The greenback so far trades with small losses following the opening bell in the old continent on Monday, extending at the same time the corrective move after hitting fresh multi-week highs near 103.60 in the second half of last week. The US Dollar (USD) stays on the back foot to start the new week as market participants stay focused on headlines surrounding the debt limit negotiations in the US. There won't be any high-impact macroeconomic data releases featured in the US economic docket but several Fed officials will be delivering speeches.

Key events in the US this week: Flash Manufacturing/Services PMI, New Home Sales (Tuesday) – MBA Mortgage Applications, FOMC Minutes (Wednesday) – Initial Jobless Claims, Chicago Fed National Activity Index, Pending Home Sales, Advanced Q1 GDP Growth Rate (Thursday) – PCE/Core PCE, Durable Goods Orders, Flash Goods Trade Balance, Personal Income/Spending, Final Michigan Consumer Sentiment (Friday).