Voting gets underway this week for the European Parliamentary elections

  • Wednesday - Will the Federal Open Market Committee (FOMC) meeting minutes provide clues that policy changes are coming at the US central bank?
  • Thursday-Sunday - European voters start to head for the polls. Will the Conservative Party in the UK face another drubbing?
  • Friday – The US Durable Goods Orders print has the potential to raise fresh alarm bells over the US economic outlook.

Monday

The Chicago Federal Reserve National Activity Index for April will be published today. A gauge of overall economic activity and accompanying inflationary pressures has been stuck in negative territory since the start of the year. A modest uptick is expected, though the reading is still likely to remain in negative territory.

Tuesday

The Confederation of British Industry’s (CBI) Industrial Trends Order figure for May is set to be released on Tuesday. The figure can add some insight into the Brexit impact on the underlying UK economy. Having fallen to -5 in April, expectations are for a print of +1 to be recorded.

Eurozone Consumer Confidence for May will be published, with forecasts suggesting there will be further deterioration from last month’s print of -7.9. Expectations are pointing to a reading of -8.6, which would make for the weakest performance in around two years, which could raise fresh concerns about the Eurozone economy.

US Existing Home Sales for April will be published, and the market keenly hopes for evidence that the dip seen earlier in the year was nothing more than an outlier. Expectations are for sales of 5.3 million, up from the March figure of 5.2 million, and significantly higher than the 4.9 million seen in January.

Wednesday

UK Consumer Price Inflation for April is due out on Wednesday. The Bank of England (BoE) needs to keep this reading close to 2.0% but is struggling to amend monetary policy while Brexit uncertainty prevails. A reading above the March print of 1.8% will add weight to the argument that as soon as there’s some clarity over the UK’s future with the European Union, a quick rate hike may be necessary to mitigate inflationary pressures.

Meanwhile, the latest Federal Open Market Committee meeting minutes will be published.  Markets will be looking for phrases describing the bank’s policy intent for the coming months. The market is taking a more dovish stance over the outlook for interest rates than the central bank, so anything that can reconcile the disparity has the potential to steer the US Dollar.

Thursday

Flash Purchasing Managers’ Index (PMI) readings for the Eurozone in May are due for release today. The May Services PMI print is expected to improve from 52.8 to 53.2 while the Manufacturing PMI is called at 48.5, up from 47.9. The latter print is likely to dominate as it still reflects contraction and has the potential to underline that industrial output from the Eurozone continues to lag, before the potential disruption of Brexit or headwinds from potential US tariffs.

PMI data from the US for May will be published today, and it’s the manufacturing figure that is likely to be in focus here too. Despite generous fiscal stimulus and the deployment of protectionist tariffs, this reading continues to contract. The forecast of 51.6 would be the lowest print in three years and be moving dangerously close to the break-even 50.0 mark.

Voting gets underway for the European Parliamentary elections, lasting until the weekend. UK voters will be among the first to the polls, and a big win for pro-Brexit parties could flag fresh concern of a potential no-deal Brexit. Across the trading bloc, attention will focus on the scale of gains for the populist parties, who could push back against what they perceive as damaging fiscal controls on member states.

Friday

UK Retail Sales readings for April are expected. After the jump recorded in March, the figure is forecast to pull back. A year-on-year reading of 4.1% is predicted, down from March’s 6.7%, but figures at this level haven’t been consistently recorded since 2016. This does have the potential to fuel concerns of inflation and could encourage a more hawkish bias at the Bank of England.

US Durable Goods orders for April will round off the week, with the reading expected to slump into negative territory. After recording 2.7% growth in March, forecasts of -1.8% are being cited. Again, this has the potential to raise fresh concerns over the health of the US economy and may see more calls for the Fed to deliver monetary stimulus.