USD

The Dollar Index incurred further losses last week as U.S. jobs data for April came in well below expectations, souring hopes that a sustained economic recovery would lead to higher rates in the near future. The recent job market also materializes the bearish USD trend, at least in the short term, while supporting the Fed’s view about an unveiled economic recovery. It is a busy week ahead, with the consumer (Wed) and producer (Thu) price inflation updates for April tracking the recovery momentum and feeding the thought of faster growth to inflation. A larger-than-expected rise in inflation and a hawkish turn by the Fed would present a major hindrance to the still-incipient global economic recovery. The health of the private sector comes into focus with the release of retail sales and industrial production numbers on Friday. Key figures coming up:

• On Tuesday (05/11): NFIB Business Optimism Index (Apr) | JOLTS Job Openings (Mar) | API Weekly Crude Inventory
• On Wednesday (05/12): Consumer Price Index (Apr) | EIA Crude Oil Inventory | Monthly Budget (Apr)
• On Thursday (05/13): Initial Jobless Claim (Weekly) | Producer Price Index (Apr)
• On Friday (05/14): Retail Sales (Apr) | Industrial Production (Apr) | Business Inventories (Mar) | University of Michigan Consumer Sentiment (May)

EUR

A globally supported risk appetite may continue to help the Euro in the week ahead. The week’s economic docket is relatively quiet, with May’s German ZEW Economic Sentiment on Tuesday and March’s Industrial Production for Eurozone on Wednesday, both having a limited impact on EUR. The lack of material stats from the EU suggests that the EUR/USD direction will be driven by the dollar narrative. Meanwhile, the economic outlook for the region is improving. For instance, Spain’s state of alarm ended on Sunday with curfews and border closures being abolished in most regions. Therefore, the eurozone data should rebound as it gets into the summer while the speculation about the European Central Bank tapering its bond purchase program is growing. Key figures coming up:

• On Monday (05/10): Sentix Investor Confidence (May)
• On Tuesday (05/11): Germany ZEW Economic Sentiment (May)
• On Wednesday (05/12): Germany Consumer Price Inflation (Apr, final) | EZ Industrial Production (Mar)
• On Thursday (05/13): Germany Wholesale Price Index (Apr)
• On Friday (05/14): ECB Monetary Policy Statement

GBP

Having the flash PMI for April reaching an all-time high, the economy reopening and the U.K. vaccine roll-out injecting confidence into both businesses and consumers, the monthly GDP update (Wed) will complete a full picture of economic growth in Q1. It should be a calmer week for GBP after the Bank of England meeting and Scottish election last week. On the latter, Scottish nationalists failed to win an outright majority in the country's devolved parliament over the weekend, however, the pro-independence Green party will enable it to push for a second referendum for independence. Key figures coming up:

• On Monday (05/10): Halifax House Price Index (Apr) | BRC Retail Sales Monitor (Apr)
• On Tuesday (05/11): BoE Gov Bailey Speaks 
• On Wednesday (05/12):  Business Investment (Q1) | Construction Output (Mar) | GDP (Q1) | Industrial Production (Mar) | Manufacturing Production (Mar) | Trade Balance (Mar) | BoE Gov Bailey Speaks | RICS House Price Balance (Apr)
• On Thursday (05/13): BoE MPC Member Cunliffe Speaks | BoE Gov Bailey Speaks

JPY

In Japan, authorities extended a state of emergency in Tokyo and three other areas until the end of May to curb a surge in Covid-19 infections, but Prime Minister Yoshihide Suga reiterated that it is still possible to host Tokyo Olympics this summer. Nonetheless, public opinion largely diverges from this idea, with a recent poll showing that 60% of people in Japan want the Olympics canceled less than three months before they begin. Apart from the pandemic situation, in the week ahead, the Treasury auction and inflation data from the U.S. will keep Japanese investors focused on rates dynamics, with the JPY’s short-term outlook staying tied to the U.S. Treasury yields. Domestically, current account data for March on Wednesday will be in focus, alongside Machine Tool Orders on Friday. Key figures coming up:

• On Monday (05/10): Household Spending (Mar) | BoJ Summary of Opinions 
• On Tuesday (05/11): Foreign Reserves (USD) (Apr) 
• On Wednesday (05/12):  Coincident Indicator (Mar) | Leading Index (Mar) | Current Account n.s.a. (Mar) | Bank Lending (Apr)
• On Thursday (05/13): Economy Watchers Current Index (Apr) | M3 Money Supply (Apr)
• On Friday (05/14): Machine Tool Orders (Apr)

CAD

The Loonie continued to enjoy the lasting hawkish tone from Canada’s Central Bank amid buoyant commodities prices. Against this backdrop, last week the currency outperformed among G10 peers, trading at a new three-and-a-half-year high against its U.S. rival. Looking ahead, it is a rather quiet week on the economic calendar. Both manufacturing and wholesaling for March on Friday are set to show a solid advance. Before that, BoC Governor Tiff Macklem will give a public speech on Thursday, with market players waiting for comments about recent Canadian dollar strength, either to show some concern or argue that it is in line with firmer commodity prices. In general, the Loonie might remain supported due to the global risk-supportive mood. Key figures coming up:

• On Thursday (05/13): BoC Gov Macklem Speaks 
• On Friday (05/14): Manufacturing Sales (Mar) | New Motor Vehicle Sales (Apr) | Wholesale Sales (Mar)

MXN

Last week showed that the Mexican annual inflation picked up faster than expected in April to its highest level in more than three years, moving well above the central bank’s target level set at 3%, with a one percentage tolerance range above and below that. Given that the interest rate decision on Thursday will be the most relevant event of this week, Mexico’s central bank is likely to hold interest rates at4% while it considers it to be premature to tighten the policy. Other releases will include Gross Fixed Investments during February on Tuesday and industrial output during March on Wednesday. Key figures coming up:

• On Tuesday (05/11): Gross Fixed Investments (Feb)
• On Wednesday (05/12): Industrial Production (Mar)  
• On Thursday (05/13): Interest Rate Decision (May)

CNY

After a short last week due to the long national holiday, the upcoming week brings with itself important updates to gauge the economic recovery and to catch up with the international market. China updates inflation figures for April on Monday. Prices had been surging into the arrival of the pandemic in Asia’s largest economy by late 2019 and early 2020 and have since fallen back to around 0% year-over-year. It is expected to see some improvement. Other releases will include China’s financing and credit figures for April. Elsewhere, market participants will keep all eyes on the geopolitics developments as China is becoming increasingly isolated on the international stage. The scaled geopolitical tensions could sour the global sentiment and encourage investors to move towards safe-haven assets. Key figures coming up:

• On Monday (05/10): Consumer Price Index (Apr) | Producer Price Index (Apr)
• On Tuesday (05/11): M2 Money Stock (Apr) | New Loans (Apr) | Outstanding Loan Growth (Apr)
• On Thursday (05/13): Foreign Direct Investment (Apr)

BRL

Last week marked the beginning of the Senate’s Parliamentary Inquiry Committee which will investigate the Covid-19 response in Brazil (Covid CPI), with former health ministers giving their testimonies amid an increased institutional tension. The Monetary Policy Committee (Copom) was also center stage, with Brazil’s Central Bank raising the basic interest rate by 0.75%, in a move to slow down galloping inflation. As a result, the Brazilian Real strongly appreciated against the U.S. dollar. This week, the Covid CPI will continue to have a decisive influence on politics, likely tarnishing the government’s public image and raising tensions between Congress and Senate. On the economic front, fresh inflation updates on Tuesday and the Economic Activity Index on Thursday could attract greater attention. Key figures coming up:

• On Monday (05/10): BCB Focus Market Readout   
• On Tuesday (05/11): BCB Copom Meeting Minutes | Consumer Price Index (IPCA) (Apr)
• On Wednesday (05/12): Service Sector Growth (Mar) | Foreign Exchange Flows
• On Thursday (05/13): IBC-Br Economic Activity