Financial markets have begun the day on a calmer footing, but it doesn’t mean that this could continue. With some important macroeconomic data due to release later today, an increase in volatility is likely.
In focus early in the morning will be Eurozone Industrial Production (10:00 am BST), forecast rebounding to 0.3% in March from -0.3% in February, back to levels last seen around the turn of the year. On an annual basis, the pace should continue to accelerate (2.3% vs 1.2% prev) from January’s 6-month low just above breakeven.
This afternoon, US CPI (1.30 pm BST) probably bounced back in April from its weakest since January 2015 (0.2% vs -0.3% prev), although the 12-month figure likely eased another notch (2.3% vs 2.4% prev) from February’s peak. The more closely watched Core measure probably also bounced (0.2% vs -0.1% previously), but held firm at 2% over the last 12 months, the slowest since November 2015.
US data is expected to show a solid improvement. Thus, the bar is quite high for the USD to rally. source: Bloomberg
US Retail Sales (also 1.30pm BST) are expected to deliver a strong return to growth (0.6% vs -0.2% previously), back to January levels following a disappointing February and March. Despite this, strong annual growth of 5.2% may be checked by a strong comparison period last April (1.2%). Retail Sales Ex-Autos should recover from a flat March but the Control Group may slow up a little while Real Average Earnings could steal the show given the Fed’s focus on inflationary pressures.
As the debate rages about soft vs hard data, listen out for the latest reading on US Consumer Confidence from the University of Michigan (3pm BST). Consensus is calling Sentiment and Expectations flat but a deterioration in Current Conditions may be on the cards. The Fed’s Evans speaks in Dublin mid-afternoon and the Baker Hughes Rig Count after the European close may impact oil prices if it suggests intensification of rising US production, at odds with OPEC efforts to curb global production to end the glut.