Fed Tightening in Focus: Key PCE Data and Speeches This Week

The US Dollar bounced back this week, supported by recent hawkish comments from the Federal Reserve and strong US economic data. This reinforces the idea that the Fed will keep interest rates high for longer than expected.

Here’s what to watch for next week:

• Housing Market: The FHFA House Price Index (May 28th) will give an update on home prices, followed by Consumer Confidence (May 28th), which reflects how optimistic people are about the economy.
• Mortgage Market: Mortgage Applications data (May 29th) will show how many people are applying for loans to buy homes.
• The Fed: The Fed’s Beige Book (May 29th) summarizes economic conditions across the country.
• Economic Growth: We’ll get a revised look at the first quarter’s economic growth (May 30th).
• Jobs and Trade: Weekly jobless claims (May 30th) will show how many people filed for unemployment, while the Goods Trade Balance (May 30th) will reveal the difference between US imports and exports.
• Inflation and Spending: The most important data comes on May 31st, with the Personal Consumption Expenditures (PCE) price index, a key inflation measure. We’ll also see data on Personal Income and Spending.

So, buckle up for a data-packed week that will give us a clearer picture of the US economy and the Fed’s next move on interest rates.

Euro Struggles as Key European Data Looms

The Euro continued its downward trend this week, briefly dipping near $1.08. But will it stay low? Here’s what European data could tell us next week:

• Germany’s Business Climate (May 27th): This report gauges how optimistic German businesses are about the economy. A positive number suggests confidence, which could strengthen the Euro.
• German Consumer Confidence and Inflation (May 29th): This data shows how confident German consumers feel about spending and the current inflation rate. Higher confidence and lower inflation could boost the Euro.
• Eurozone Confidence and Jobs (May 30th): We’ll get a final look at consumer, economic, and industrial confidence across the Eurozone, along with the latest unemployment rate. Strong confidence and low unemployment could support the Euro.
• German Retail Sales and Eurozone Inflation (May 31st): This data reveals how much Germans are spending and the preliminary inflation rate for the entire Eurozone. Higher spending and lower inflation could be positive signs for the Euro.

British Pound Gains Ground

British Pound (GBP): The Pound continued its rally for the second week in a row, surpassing the key resistance level of 1.27. Keep an eye on UK housing data scheduled for release on May 31st, including Nationwide House Prices, Mortgage Lending and Mortgage Approvals.

Australian Dollar Stumbles After Rally, Key Data on Tap

The Australian Dollar (AUD) hit a wall at around $.67 recently and has pulled back a bit. Here’s what data could impact the AUD next week:

• May 28th: Preliminary Retail Sales: This will show how much Australians are spending, which can impact the economy and the AUD.
• May 29th: Westpac Leading Index and RBA’s Monthly CPI Indicator -The Westpac Leading Index predicts future economic activity, while the RBA’s CPI Indicator tracks inflation. Both can affect the AUD.
• May 30th: Preliminary Building Permits This shows how many new buildings are planned, which can reflect confidence in the economy and impact the AUD.
• May 31st: Housing Credit – This reveals how much money is being borrowed for housing, another sign of economic confidence and a potential mover for the AUD.

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