Major events:
Tuesday, May 14, UK average weekly earnings in March
Wage growth data is one of the important indicators that the Bank of England refers to when formulating policy. Unemployment is expected to rise slightly as the labor market struggles to find balance and wage growth remains sticky so far. If wages rise more than expected, it will help boost the pound.
Thursday, May 15: U.S. April Consumer Price Index (CPI), Retail Sales
The market generally predicts that the U.S. core CPI rose 0.3% month-on-month in April, down 0.1% from the previous month. Retail sales growth is expected to decline to 0.4% month-on-month from 0.7% in March. Economists believe that the core CPI monthly rate needs to fall to 0.2% so that inflation can return to target levels over time. If inflation remains sticky, the Fed may not consider cutting interest rates until after the summer, which would provide support for the dollar.
Friday, May 17: China April retail sales, industrial production, fixed asset investment
China is about to release three major economic activity data, all of which are expected to achieve slight year-on-year growth. But lingering uncertainty about the labor market and consumer activity means growth is likely to continue to come from industrial expansion. Strong economic data from China will help boost cyclical currencies such as the Australian and New Zealand dollars, as well as the pound.
