Asian markets were in retreat on Monday as U.S. stock futures slid on rate worries, and a tightening lockdown in Shanghai stoked concerns about global economic growth and possible recession.
There was no let-up in China’s zero-COVID policy with Shanghai tightening the city-wide COVID lockdown for 25 million residents.
Investors are also tense ahead of the U.S. consumer price report due on Wednesday where only a slight easing in inflation is forecast, and certainly nothing to prevent the Federal Reserve from hiking by at least 50 basis points in June. Core inflation is seen rising by 0.4% in April, up from 0.3% the previous month, even as the annual pace dips a bit due to base effects.
The latest data on Germany’s ZEW sentiment index and preliminary first quarter GDP data from the U.K. will highlight the dilemma central banks are facing as they try to combat soaring prices amid heightened concerns over the outlook for growth.
Economists are expecting the ZEW index to have dropped again in April from a level that was already the lowest since the beginning of the pandemic in 2020.
In the U.K., the economy is expected to have expanded by 1% in the first quarter, but the monthly reading for March is expected to be flat.
Last week the Bank of England warned that Britain risks a double-whammy of a recession and inflation above 10% as it hiked interest rates to 1%, their highest since 2009.
Several European Central Bank officials are due to speak during the coming week, including President Christine Lagarde on Wednesday.
The European Union is close to agreeing on a fresh round of sanctions against Moscow for invading Ukraine, including a phased embargo on Russian oil, which makes up over a quarter of EU imports.
The move will push European refineries into a race to find new crude suppliers and leave drivers with bigger bills at the pump at a time when the cost-of-living crisis is squeezing consumers globally.
Plan your trades carefully and have a great trading week!
This Week’s High Impact Events
The times below are GMT +3.
Monday 9th May
16.00 – UK – MPC Member Saunders Speaks
Potential instruments to Trade: GBP Crosses.
Tuesday 10th May
20.00 – US – FOMC Member Waller Speaks
Potential instruments to Trade: USD Crosses.
22.00 – US – FOMC Member Mester Speaks
Potential instruments to Trade: USD Crosses.
Wednesday 11th May
11.00 – Europe – ECB President Lagarde Speaks
Potential instruments to Trade: EUR Crosses.
All-Day – OPEC Meetings
Potential instruments to Trade: All Crosses.
15.30 – US – CPI m/m & Core CPI m/m
Potential instruments to Trade: USD Crosses.
Thursday 12th May
06.00 – New Zealand – Inflation Expectations q/q
Potential instruments to Trade: NZD Crosses.
09.00 – UK – Prelim GDP q/q
Potential instruments to Trade: GBP Crosses.
15.30 – US – PPI m/m, Core PPI m/m, & Unemployment Claims
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