The third full trading week of the month sees the tier one data ramp up again. The US consumer is in focus, with the Retail Sales data the highlight of the week. Although major US data is a little thin, elsewhere, there is plenty to move markets with plenty of inflation and growth data scheduled. There is a triple hit of UK data, with unemployment, CPI inflation, and retail sales. For Asian markets, Japanese growth and inflation will be eyed, along with Australian unemployment and Chinese interest rates. For Lat Am, the focus is on GDP growth for Colombia and Chile. 

Watch for: 

  • North America – US Retail Sales and Industrial Production, and Canadian CPI
  • Europe & Asia – UK labor market data, CPI and retail sales; Japanese GDP and CPI; Australian unemployment and the People’s Bank of China interest rates.
  • LatAm – Colombia and Chile GDP

North American data: 

  • New York Fed Manufacturing (Monday 16th May, 1330BST) Consensus is expecting a drop to +16.5 in May (from +24.6 in April)
  • US Retail Sales (Tuesday 17th May, 1330BST) Monthly core sales (ex-autos) are expected to grow by +0.3% in April (after growing by +1.1% in March).
  • US Industrial Production (Tuesday 17th May, 1415BST) Monthly production is expected to have increased by +0.4% in April (after +0.9% in March).
  • US Building Permits and Housing Starts (Wednesday 18th May, 1330BST) Both are expected to fall slightly in April, with BP down to 1.813m (from 1.870m in March) and HS down to 1.783m (from 1.793m)
  • Canada CPI (Wednesday 18th May, 1530BST) Headline CPI is expected to fall to 6.3% in April (from 6.7% in March) with core CPI expected to remain steady at 5.5% (5.5% previously)
  • Philly Fed Manufacturing (Thursday 19th May, 1330BST) The index is expected to reduce slightly to 17.2 in May (from 17.6 in April)
  • US Existing Home Sales (Thursday 19th May, 1500BST) Existing sales are expected to decline to 5.65m in April (from 5.77m in March)

Consumer spending is around 70% of the US economy, so US Retail Sales are considered a good gauge of the direction of the economy. Adjusted sales have increased every month since the turn of the year, suggesting the economy remains on a sound footing for now. However, April is expected to be less strong and a downside surprise (perhaps negative) would be a concern that the economy is creaking under the weight of inflation pressures.

Retail Sales

Industrial Production gives the other main sector outlook for the US economy. Once more the consensus is looking for more moderate growth in April which would drag the 12-month growth down towards 2%. Although Capacity Utilization is expected to continue to improve above pre-COVID levels (towards 78.6%, the production trend looks to be turning lower. This plays into concerns of an economic growth decline. If the May data for the regional Fed surveys also reflect this reduction with negative surprises, then these concerns will only mount.

US Industrial Production

Canadian CPI inflation will be key for CAD traders on Wednesday. According to Bank of Canada Deputy Governor Gravelle the policy rate of 1.0% is “too stimulative” for the price pressures being faced. This suggests more tightening on the way. According to the consensus, the headline Canadian CPI is expected to start declining on Wednesday (although the core is expected to level off). However, given the upside surprise in the US CPI last week, there will be caution in positioning for lower inflation. This may help to support CAD.

Market Reaction: 

  • USD volatility on retail sales and industrial production
  • CAD would be supported if Canadian inflation follows US CPI with an upside surprise.

Europe & Asia: 

  • UK Unemployment and Average Weekly Earnings (Tuesday 17th May, 0700BST) Headline jobless rate is expected to remain at 3.8% in March with total wages expected to increase to 5.7% (from 5.4%)
  • Eurozone GDP (Tuesday 17th May, 1000BST) The second estimate of GDP is expected to be unrevised at +0.2% (which would be down from +0.3% in Q4 2021)
  • Japan GDP (Wednesday 18th May, 0050BST) Prelim GDP is expected to have fallen by -0.4% in Q1 (after growth of +1.1% in Q4 2021)
  • UK CPI (Wednesday 18th May, 0700BST) Headline inflation is expected to see a massive jump in April to 8.9% (from 7.0% in March), with core CPI expected to increase to 6.5% (from 5.7%).
  • Eurozone final inflation (Wednesday 18th May, 1000BST) Consensus is expecting inflation to be unrevised at 7.5% for headline HICP and at 3.5% for core HICP.
  • Australian Unemployment (Thursday 19th May, 0230BST) The jobless rate is expected to fall slightly to 3.9% in April (from 4.0% in March)
  • ECB monetary policy meeting accounts (Thursday 19th May, 1230BST) 
  • Japan core CPI (Friday 20th May, 0030BST) Core inflation is expected to increase to +1.2% in April (from +0.8% in March)
  • PBoC interest rates (Friday 20th May, 0230BST) Chinese interest rates are expected to be on hold with a 3.7% 1 year Loan Prime Rate.
  • UK Retail Sales (Friday 20th May, 0700BST) Consensus is expecting another month of declining sales, down another -1.2% in April (after a decline of -1.1% in March)
  • Eurozone Consumer Confidence (Friday 20th May, 1500BST) Confidence is expected to continue to decline, to -21.3 in May (down from -22.0 in April).

Inflation may be peaking in North America, but this is not the case elsewhere. The UK CPI is expected to jump hugely in April. Headline inflation is expected to almost hit 9% whilst core inflation is expected to jump to 6.5%. Huge increases in household energy prices are the driver, and Tuesday’s expected increase in wage growth will only add to the concerns that inflation will take a while to come down. According to the Bank of England, the situation is expected to worsen in the coming months and only peak towards the end of 2022. 

Inflation is also expected to jump higher in Japan with Japanese core CPI expected to be at 1.2%. However, Bank of Japan Governor Kuroda remains dovish whilst he believes the increase in energy prices is a key driver, but this lacks sustainability and is still way under the 2% target. 


Elsewhere, we are expecting to see growth deteriorating in Q1 GDP for Japan whilst the consensus is not expecting any revisions to Q1 Eurozone GDP of a meager +0.2%. UK Retail Sales are expected to reflect a continued picture of deterioration in the economic outlook, as laid out by the Bank of England recently. 

Market Reaction: 

  • GBP traders have plenty to keep them occupied throughout the week, with unemployment and wages, CPI, and Retail Sales. The broad picture looks negative for GBP still.
  • JPY may have an uncharacteristic week of elevated interest, with GDP and inflation on the docket. Unless there are any significant upside surprises in CPI or GDP then moves may be limited.
  • Eurozone GDP and inflation are expected to be unrevised from previous readings, but the ECB meeting minutes may provide some action for EUR if there is a swelling of hawkish noise on the Governing Council

Latin America: 

  • Colombian GDP (Monday 16th May, 1700BST) Q1 growth is expected to decline by -0.8% QoQ (after growth of +4.3% in Q4 2021)
  • Chilean GDP (Wednesday 18th May, 1330BST) Q1 GDP is expected to show slight growth of +0.3% QoQ (after +1.8% growth in Q4 2021)

It is all about economic growth in Lat Am this week. Colombian GDP is expected to take a hit in Q1 with a decline of -0.8%. It will be interesting to see how much this has been priced in by Colombian peso traders. Chilean GDP is expected to have held up better in Q1. Both economies are facing significant fluctuations in commodities prices but Q1 is already in the rearview mirror, which may mean less reaction to the data this week. 

currencies performance

Market Reaction

  • COP will be reactive to Colombian GDP. The sharp decline of the last month on COP suggests anticipation of a Q1 decline. But any negative surprise would still weigh on COP further
  • CLP may be relatively supported amongst Lat Am peers, especially if growth remains positive in Q1

This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.