Week’s main events (May 18 – May 22)

Global markets in the coming week will remain focused on developments in the US–Iran conflict, where alternating conciliatory and hardline rhetoric will continue shaping investor sentiment and amplifying volatility across commodity, currency, and equity markets. Any signals regarding the Strait of Hormuz and the outlook for oil supply will have a direct impact on inflation expectations and interest‑rate projections in major economies. Additional attention will be drawn to the release of the minutes from the latest Federal Reserve meeting. Among US macro releases, the key data points will be the preliminary PMI business activity indices and housing‑price figures. In Europe, investors will monitor the Eurozone PMIs as well as Germany’s Ifo surveys, which will help assess the extent to which elevated energy prices are weighing on regional economic activity. In the United Kingdom, political instability surrounding a potential leadership challenge to Prime Minister Keir Starmer by Andy Burnham will remain in focus, while markets also evaluate inflation, labor‑market, and retail‑sales data. In Asia, the spotlight will be on China’s industrial production and retail‑sales figures, the PBoC’s rate decision, and Japan’s inflation and GDP data, which may influence expectations for the Bank of Japan’s next policy steps.

Monday, May 18

The latest data package from Beijing confirms divergence within the Chinese economy. Industrial Production expanded by a resilient 6.0% year-over-year, propelled by robust green-technology and automotive exports, which continue to provide a solid floor for industrial commodities and copper. In sharp contrast, domestic consumer demand remains deeply stagnant, with Retail Sales ticking up by a mere 1.7% as the ongoing property crisis and a sticky 5.3% Unemployment Rate keep households highly cautious. For global markets, this structural imbalance means Chinese manufacturers are facing a severe margin squeeze – paying higher prices for imported raw materials due to geopolitical frictions while lacking the pricing power to pass costs onto a reluctant domestic consumer. Without aggressive, consumer-focused stimulus from Beijing, the Offshore yuan (CNH) is likely to remain capped, while equity indices like the Hang Seng (HK50) and China A50 will struggle to sustain a structural rally.

Main events of the day:

– China Industrial Production (m/m) at 05:00 (GMT+3) – CHA50, HK50 (MED)
– China Retail Sales (m/m) at 05:00 (GMT+3) – CHA50, HK50 (MED)
– China Unemployment Rate (m/m) at 05:00 (GMT+3) – CHA50, HK50 (MED)

Tuesday, May 19

During Tuesday’s session, key macroeconomic data will be released, notably Canadian inflation figures and key labor market data from the UK. In Canada, the inflation rate is expected to remain roughly unchanged. Although the Bank of Canada has signaled its intention to ignore temporary spikes in energy prices, a reading exceeding 2.6% year-over-year would increase the likelihood of a rate hike, which would provide support for the Canadian dollar (CAD) against G10 currencies. The UK labor market package will heavily dictate short-term sterling (GBP) momentum. Recent readings have shown a cooling trend with the Claimant Count ticking up to 26.8k, and traders will be laser-focused on whether the Average Earnings Index continues to decelerate or remains stubbornly sticky. This could put even more pressure on the pound, which fell sharply last week due to the rise of the dollar and political uncertainty within Parliament. Concurrently, Japan’s Q1 GDP is expected to edge up to 3.1% y/y, a print that would give the Bank of Japan (BoJ) further economic justification to pursue rate normalization.

Main events of the day:

– New Zealand Producer Price Index (q/q) at 01:45 (GMT+3) – NZD (MED)
– Japan GDP (q/q) at 02:50 (GMT+3) – JPY (MED)
– Australia RBA Monetary Policy Meeting Minutes at 04:30 (GMT+3) – AUD (MED)
– UK Claimant Count Change (m/m) at 09:00 (GMT+3) – GBP (HIGH)
– UK Average Earnings Index (m/m) at 09:00 (GMT+3) – GBP (HIGH)
– UK Unemployment Rate (m/m) at 09:00 (GMT+3) – GBP (HIGH)
– Eurozone Trade Balance (m/q) at 02:50 (GMT+3) – EUR (LOW)
– Canada Consumer Price Index (m/m) at 15:30 (GMT+3) – CAD (HIGH)
– US Pending Home Sales (m/m) at 17:00 (GMT+3) – USD (LOW)

Wednesday, May 20

Wednesday’s session will mark a significant turning point in volatility trends across global markets, largely driven by the release of UK inflation data and the long-awaited FOMC meeting minutes. This morning, the UK’s headline Consumer Price Index is expected to come in at 3.0% for headline inflation and 2.5% for core inflation on an annual basis, down from March’s 3.3% and 3.1%, respectively. Lower inflation will reduce the number of rate hikes by the Bank of England (BoE), which should have a negative impact on the British pound (GBP) against both the euro and the yen. However, any surprise in the form of rising consumer inflation will lead to a strengthening of the pound amid a reassessment of the Bank of England’s policy. Later this evening, the FOMC meeting minutes will reveal a deepening and highly unusual rift within the Federal Reserve. The April meeting revealed four official dissenting opinions, with members divided over whether to abandon the central bank’s dovish stance, as regional geopolitical conflict pushes energy prices higher and keeps short-term inflation elevated. If the minutes reveal an aggressive, growing camp insisting on a hawkish policy stance, or even hinting that rate hikes may be necessary, the US dollar (DXY) will experience a structural rally, causing the 10-year Treasury yield to breach the critical 4.40% threshold and trigger a wave of gold (XAU/USD) selling.

Main events of the day:

– China PBoC Loan Prime Rate at 04:15 (GMT+3) – CHA50, HK50 (HIGH)
– UK Consumer Price Index (m/m) at 09:00 (GMT+3) – GBP (HIGH)
– UK Producer Price Index (m/m) at 09:00 (GMT+3) – GBP (MED)
– Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3) – EUR (MED)
– US Crude Oil Reserves (w/w) at 17:30 (GMT+3) – WTI (HIGH)
– US FOMC Meeting Minutes at 21:00 (GMT+3) – USD (HIGH)

Thursday, May 21

Thursday’s session is highly concentrated around flash Purchasing Managers‘ Index (PMI) data from all major economic blocs, layered with an important Australian employment release. The morning kicks off with Australia’s Unemployment Rate, which is broadly projected to hold steady at 4.3%. Given the recent RBA rate hike to combat energy-driven inflation, any unexpected jump in joblessness would hint that tight monetary policy is finally fracturing the domestic labor market, potentially pulling the Australian dollar (AUD) down. Conversely, a lower print paired with expansionary local Services PMI readings will fortify the RBA’s hawkish posture, driving structural strength into aussie crosses. Later in the day, global growth momentum will be reassessed through a deluge of flash PMIs. The Eurozone and UK Manufacturing gauges are expected to continue showing divergence as they contend with sticky industrial costs from regional trade frictions, while their respective services sectors remain the vital drivers of growth. For the US dollar (DXY), the afternoon print of the S&P Global Services PMI (projected near 51.1) will be the primary catalyst. If the reading accelerates alongside tight weekly Initial Jobless Claims, it will fuel market expectations that domestic demand can shoulder high interest rates indefinitely, keeping pressure on major currencies and commodities.

Main events of the day:

– New Zealand Trade Balance (q/q) at 01:45 (GMT+3) – NZD (MED)
– Australia Manufacturing PMI (m/m) at 02:00 (GMT+3) – AUD (MED)
– Australia Services PMI (m/m) at 02:00 (GMT+3) – AUD (MED)
– Japan Trade Balance (m/m) at 02:50 (GMT+3) – JPY (MED)
– Japan Manufacturing PMI (m/m) at 03:30 (GMT+3) – JPY (MED)
– Japan Services PMI (m/m) at 03:30 (GMT+3) – JPY (MED)
– Australia Unemployment Rate (m/m) at 04:30 (GMT+3) – AUD (HIGH)
– Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3) – EUR (MED)
– Eurozone Services PMI (m/m) at 11:00 (GMT+3) – EUR (MED)
– UK Manufacturing PMI (m/m) at 11:30 (GMT+3) – GBP (MED)
– UK Services PMI (m/m) at 11:30 (GMT+3) – GBP (MED)
– US Initial Jobless Claims (w/w) at 15:30 (GMT+3) – USD (MED)
– US Building Permit (m/m) at 15:30 (GMT+3) – USD (MED)
– US Manufacturing PMI (m/m) at 16:45 (GMT+3) – USD (MED)
– US Services PMI (m/m) at 16:45 (GMT+3) – USD (MED)
– US Natural Gas Storage (w/w) at 17:30 (GMT+3) – XNG (MED)

Friday, May 22

Friday’s session concludes the trading week with a heavy focus on corporate and consumer health across the globe, headlined by Japan’s National Core CPI. The Japanese reading is expected to show a modest recovery, climbing toward 1.8% to 1.9% year-over-year as the delayed pass-through of global energy shocks begins to trickle into domestic transportation and manufacturing costs. Because Tokyo’s leading inflation indicators have remained anchored around 1.5%, a firm print at or above 1.8% will be vital for the Japanese yen (JPY), reassuring the market that the Bank of Japan has the structural backing to consider a June rate hike. Meanwhile, Europe and North America will digest a localized look at retail resilience and business sentiment. The German Ifo Business Climate Index is projected to slip slightly, reflecting corporate anxiety over sticky industrial energy costs, though any upside surprise could offer a temporary cushion to the euro (EUR) following weak regional GDP data. In the afternoon, retail sales data from both the UK and Canada will reveal how much discretionary cash consumers have left after absorbing higher fuel prices. The weak data would suggest that high borrowing costs are finally undermining domestic economic growth, which typically has a negative impact on the national currency.

Main events of the day:

– New Zealand Retail Sales (q/q) at 01:45 (GMT+3) – NZD (MED)
– Japan National Core CPI (m/m) at 02:30 (GMT+3) – JPY (HIGH)
– UK Retail Sales (m/m) at 09:00 (GMT+3) – GBP (MED)
– German GDP (m/m) at 09:00 (GMT+3) – EUR (LOW)
– German Ifo Business Climate (m/m) at 11:00 (GMT+3) – EUR (MED)
– Canada Retail Sales (m/m) at 15:30 (GMT+3) – CAD (MED)

by JustMarkets, 2025.05.18

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