🆙 US stocks closed last Friday's session mixed as investors reduced their activity after a weeks-long rise driven by data that supported the scenario of cutting US interest rates this year. The Standard & Poor's 500 and Nasdaq recorded gains for the fourth week in a row, after rising to new record levels on Thursday, while the Dow Jones Industrial Average closed Friday's session above the key level of 40,000 for the first time in history.
📊 A set of data released last week indicated that the US economy slowed, and that inflation continued to decline in April. Mainly, both headline and core CPI rates fell year-on-year to 3.4% and 3.6% from 3.5% and 3.8%, respectively, in line with analysts' expectations. However, the overall monthly rate was slightly below expectations. The core CPI recorded the smallest annual increase since April 2021.
🛒 This slowdown in inflation combined with stagnant retail sales has reinforced the scenario that the Federal Reserve is close to starting to cut interest rates. US government data showed that retail sales rose by 3.04% on an annual basis in April, compared to a 4.02% increase in March.
⚒ Data on Thursday showed that although the labor market remains healthy, it is regularly regaining its balance. The number of Americans filing new claims for unemployment benefits decreased, but by a smaller percentage than expected. The Labor Department said initial claims for state unemployment benefits fell by 10,000 to a seasonally adjusted level of 222,000 for the week ending May 11. Economists expected 220,000 claims to be recorded in the last week.
💲 The dollar fell slightly against a basket of major currencies during the week. Although April consumer prices released last Wednesday rose less than expected - boosting risk appetite in stock markets - several Federal Reserve officials sounded words of caution about when interest rates might fall, limiting the dollar's decline. Most officials noted that although the CPI has slowed, there is no reason to change their stance on monetary policy now.
👀 In America, economic data will be released at the end of the week, with existing home sales on Wednesday, new home sales on Thursday, and durable goods orders on Friday. However, let's not forget the PMI surveys due out on Thursday which will likely be the focus for further signs that the US economy is losing some steam. Although the economic docket is light this week, Fed rate cut expectations will remain the center of attention, as minutes from the May monetary policy meeting will be released on Wednesday, while a large number of FOMC officials will speak during the week, providing more up-to-date views from... Those in the meeting minutes.
💱 The dollar ended the week unchanged against the yen, after initially falling to 153.60 following a lower-than-expected mid-week CPI report, then bouncing higher over the next two sessions. It is worth noting that the Japanese inflation report for April will be released on Friday. If the inflation reading comes close to 2.0%, it will be difficult for the Bank of Japan to raise interest rates again anytime soon. Investors are also awaiting the release of purchasing managers' indexes on Thursday.
💶 The euro recorded some modest gains last week. Although markets expect the ECB to start cutting interest rates starting in June, recent data showed some upward surprises. The German economy grew more than expected in the fourth quarter, and consumer inflation data in the euro zone on Friday came in at 2.4% year-on-year in April, in line with economists' expectations. In the Eurozone this week, the preliminary PMIs published on Thursday will be the main release.
💷 Likewise, the British pound rose more than 1.4% against the dollar last week. It is worth noting that the UK will publish its inflation statistics on Wednesday, while preliminary PMIs for May will be released on Thursday and will shed more light on economic activity. On Friday, retail sales data will be released.
💲 The dollar fell slightly against a basket of major currencies during the week. Although April consumer prices released last Wednesday rose less than expected - boosting risk appetite in stock markets - several Federal Reserve officials sounded words of caution about when interest rates might fall, limiting the dollar's decline. Most officials noted that although the CPI has slowed, there is no reason to change their stance on monetary policy now.
👀 In America, economic data will be released at the end of the week, with existing home sales on Wednesday, new home sales on Thursday, and durable goods orders on Friday. However, let's not forget the PMI surveys due out on Thursday which will likely be the focus for further signs that the US economy is losing some steam. Although the economic docket is light this week, Fed rate cut expectations will remain the center of attention, as minutes from the May monetary policy meeting will be released on Wednesday, while a large number of FOMC officials will speak during the week, providing more up-to-date views from... Those in the meeting minutes.
💱 The dollar ended the week unchanged against the yen, after initially falling to 153.60 following a lower-than-expected mid-week CPI report, then bouncing higher over the next two sessions. It is worth noting that the Japanese inflation report for April will be released on Friday. If the inflation reading comes close to 2.0%, it will be difficult for the Bank of Japan to raise interest rates again anytime soon. Investors are also awaiting the release of purchasing managers' indexes on Thursday.
💶 The euro recorded some modest gains last week. Although markets expect the ECB to start cutting interest rates starting in June, recent data showed some upward surprises. The German economy grew more than expected in the fourth quarter, and consumer inflation data in the euro zone on Friday came in at 2.4% year-on-year in April, in line with economists' expectations. In the Eurozone this week, the preliminary PMIs published on Thursday will be the main release.
💷 Likewise, the British pound rose more than 1.4% against the dollar last week. It is worth noting that the UK will publish its inflation statistics on Wednesday, while preliminary PMIs for May will be released on Thursday and will shed more light on economic activity. On Friday, retail sales data will be released.
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