Forex Market Outlook for the Week May 10 – 14, 2021

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In the upcoming week, the key economic data releases include inflation and retail sales updates from the US, the first-quarter GDP data from the UK, and the retail sales data from Australia. Having said that here is an outlook on some of the important announcements from around the world:

#1: Australia Retail Sales (05/10/2021 Monday 02:30 GMT)

In Australia, retail sales increased by 1.4 percent on a month-over-month basis in March, reversing the final 0.8 percent fall in the previous month. The reading for the month beat analysts’ expectations for a 1.0 percent increase, driven by an all-around improvement in consumer confidence and the reopening of state borders. Restaurants, cafes, and takeaway food services led to the rise in sales in the industry because of increased sales in Western Australia and Victoria. Clothing, personal accessory, and footwear retailers and department stores reported higher sales led by the same two states. On the other hand, food retailers reported a fall of 1.0 percent in sales. Considering the first quarter of this year, retail trade remained relatively unchanged, following a 2.5 percent increase in the final quarter of last year.

Forecast for April 2021: 1.4 percent

#2: Australia Annual Budget Release (05/11/2021 Tuesday 10:30 GMT)

Australia’s annual budget document outlines the income and spending levels anticipated by the government for the fiscal year. It also provides information about financial objectives, borrowing levels, and planned investments. Traders care because domestic spending and borrowing can significantly impact the economy. Increased spending not only generates more work for contractors but also creates jobs. On the other hand, borrowing levels can affect the nation’s credit rating and also provide insights into the underlying fiscal position of the nation.

#3: United Kingdom BoE Governor Andrew Bailey Speaks (05/11/2021 Tuesday 15:30 GMT)

Andrew Bailey, Governor of the Bank of England, is scheduled to participate in a panel discussion on the topic “Secured Overnight Financing Rate, term rates, and loan market developments”. The webinar is hosted by the Alternative Reference Rates Committee. Questions from the audience are expected. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates.

#4: United Kingdom Preliminary GDP (05/12/2021 Wednesday 07:00 GMT)

The GDP of the United Kingdom grew by 1.3 percent on a quarter-on-quarter basis in the final quarter of last year, higher than the 1.0 percent growth reported in the preliminary estimate. Government expenditure, particularly in healthcare and education; inventories; and business investment were revised upwards. However, a bigger fall in household consumption was reported. Further, net external demand contributed negatively to the GDP. This was because imports increased more than the exports. Third-quarter figures were revised upward to represent a 16.9 percent growth. In spite of achieving growth for two consecutive quarters, the GDP level continued to remain 7.3 percent below the pre-pandemic level. The household consumption and business investment continued to remain 7.4 percent and 9.2 percent lower than the pre-pandemic levels. The GDP contraction for the last year was also revised downward to 9.8 percent from the preliminary estimate of a 9.9 percent decline.

Forecast for the first quarter of 2021: -1.6 percent

#5: United Kingdom BoE Governor Andrew Bailey Speaks (05/12/2021 Wednesday 07:00 GMT)

Andrew Bailey, Governor of the Bank of England, is scheduled to speak at an online event hosted by the International Swaps and Derivatives Association. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates.

#6: United States CPI and Core CPI (05/12/2021 Wednesday 13:30 GMT)

forex market outlookIn the United States, consumer prices increased 0.60 percent on a month-on-month basis in March. This is the highest increase ever since 2012 because of the jump in gasoline prices which accounted for nearly 50 percent of the increase. The core consumer prices, which exclude the volatile energy and food components, rose 0.3 percent on a month-on-month basis, the most in as many as seven months because of rising rents and the cost of auto insurance.

Forecast for April 2021: 0.2 percent and 0.3 percent, respectively

#7: United States Crude Oil Inventories (05/12/2021 Wednesday 15:30 GMT)

In the United States, crude oil stocks fell by 7.99 million barrels during the week that ended on April 30, the largest drop ever since mid-January. Analysts had expected crude oil stocks to fall by 2.346 million barrels. Meanwhile, gasoline inventories rose by 0.737 million barrels against analysts’ expectations for a decrease of 0.652 million barrels.

#8: Canada BoC Governor Tiff Macklem Speaks (05/13/2021 Thursday 16:00 GMT)

Tiff Macklem, Governor of the Bank of Canada, is scheduled to speak at a virtual event hosted by the central bank. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates.

#9: United Kingdom BoE Governor Andrew Bailey Speaks (05/13/2021 Thursday 17:00 GMT)

Andrew Bailey, Governor of the Bank of England, is scheduled to speak at a webinar organized by the Citizens’ Panel Open Forum. Questions from the audience are expected. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates.

#10: United States Retail Sales and Core Retail Sales (05/14/2021 Friday 13:30 GMT)

In the United States, retail sales jumped 9.8 percent on a month-on-month basis in March, following the downward revision of prior month’s figures to 2.7 percent. The reading for the month beat analysts’ expectations for an increase of 5.9 percent. This is the highest increase ever since May 2020 as more businesses reopened and $1,400 check payments were sent from mid-March. Improvement in the weather conditions following unusually cold winter and storms in Texas as well as in some other parts of the Southern region in February also contributed to the increase in sales. Double-digit increases were reported by sporting goods stores, clothing outlets, motor vehicle dealers, food services providers and drinking places, building materials sellers, gasoline stations, and electronics and appliances stores. An increase in sales was also reported by miscellaneous items retailers, general merchandise stores, nonstore retailers, furniture stores, health and personal care stores, and food and beverages retailers.

Core retail sales, which exclude autos, increased 8.40 percent on a month-on-month basis in March, following the downward revision of the previous month’s decline in sales to 2.5 percent. The reading for the month beat analysts’ expectations for a 5.0 percent rise in retail sales.

Forecast for April 2021: 1.0 percent and 0.8 percent

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