May 16, 2022

Traders’ focus turns to inflation data

LQDFXperts Features | Traders’ focus turns to inflation data

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More volatility could be in store this week if Wednesday’s inflation data is hotter than expected.

Last week FED’s plan to hike interest rates by 50 basis points did not convince markets that it could rein in inflation. Instead, investors worried that the Federal Reserve might have been late in the interest rate hike. As a result, central banks may need to be more aggressive to curb soaring inflation.

US and Chinese CPI data will be released this week. Wednesday’s US CPI data for April will show whether the economy is nearing a peak in inflation. US inflation rose to 8.5%, the fastest surge in over 40 years. 

There will also be a flurry of speeches by Fed policymakers in the coming week.

The pound will focus on the first reading of UK Q1 GDP. The UK economy is expected to have expanded by 1% in the first quarter, but the monthly reading for March may be flat.

Energy prices will also remain in focus amid a fresh round of sanctions against Moscow, including a looming EU phased embargo on Russian oil. 

In Europe, the focus will also turn to the statements by the ECB President Christine Lagarde on Wednesday and the inflation data to be announced in Germany.

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