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Forex Major Currencies Outlook (May 13 – May 17)


President Trump announced over the weekend that tariffs on $200bn China goods will go up from 10% to 25% on Friday which made gaps on market opening.

He added that further $325bn worth of goods will be tariffed “shortly”. China’s Minister of Commerce was quoted saying that “counter-measures” would be adopted if USA proceeds forward with the tariffs. On Friday tariffs have been raised and China replied that it is forced to retaliate. Tariffs are applied to goods that are coming out of Chinese ports from Friday May 10 which gives a 2 week period before they have effect on Chinese exports and US imports.

Trade balance for the month of March came in at -$50bn vs -$50.1bn as expected with prior reading showing -$49.4bn. Exports rose 1% while imports rose 1.1%. It shows that demand for US goods and services increased around the globe and that domestic demand for imported goods is still strong. US-China trade deficit has been lowered to $20.75bn. Goods deficit was $72.4bn while services surplus was $22.4bn. Headline CPI for the month of April came in at 2% y/y vs 2.1% y/y as expected with prior reading showing 1.9% y/y. Core CPI figure came in at 2.1% y/y as expected. Real average hourly earnings came in at 1.2% y/y vs 1.3% y/y the previous month while real average weekly earnings came in at 0.9% y/y vs 1.4% y/y the previous month. Drop in earnings is a cause for concern for US workers.

This week we will have consumption and housing data as well as data on industrial production. President Trump will make decision on auto tariffs on May 18.

Important news for USD:


  • Retail Sales
  • Industrial Production
  • Business Inventories


  • Housing Starts
  • Building Permits


Final services and composite PMI numbers came in a bit better than preliminary readings with services coming in at 52.8 and composite at 51.5. The improvement was reached on the back of stronger German services PMI while France, Spain and Italy services PMI came weaker than preliminary reading showed. Overall economic conditions stay subdued and Q2 rebound is still missing. Retail sales for the month of March came in flat at 0% m/m vs -0.1% m/m as expected.

This week we will have data on industrial production, second reading of Q1 GDP from EU and preliminary reading of Germany’s Q1 GDP as well as employment data, trade balance data and inflation data.

Important news for EUR:


  • Industrial Production
  • ZEW Economic Sentiment (EU and Germany)


  • GDP (EU and Germany)
  • Employment Change


  • Trade Balance


  • CPI
  • Construction Output


Pressures are building for PM May to resign. She is coming under increasing pressure to set a leaving date and it has been reported that Members of Parliament from her ruling Conservative Party are demanding a firm timetable for her departure. She has rejected to quit and stands firm with her decision to leave after first phase of Brexit is completed. Cross-party talks are still going nowhere as neither side is willing to move its red lines.

Preliminary Q1 GDP came in at 0.5% q/q as expected putting yearly figure at 1.8% as expected. Main contributor to the rise in GDP was stockpiling due to Brexit uncertainty. It contributed roughly 0.7% to the GDP figure. Total business investment have improved to 0.5% q/q vs -0.7% q/q as expected. This is a very welcoming surprise showing that businesses regain trust in the economy despite the surrounding Brexit uncertainties. Manufacturing and industrial production have beaten the expectations while construction output declined.

This week we will have employment and wages data and meeting of 1922 Committee that could potentially seal PM May’s future as PM.

Important news for GBP:


  • Claimant Count Change
  • Unemployment Rate
  • Average Weekly Earnings


China Caixin services PMI came in at 54.5 vs 54.2 as expected and composite PMI came in at 52.7 vs 52.9 the previous month. Effects of the reading were subdued by Trump’s message on tariffs. China has also eased its monetary policy by cutting reserve requirement ratio for small and midsized banks to 8%. This move is expected to improve lending conditions and thus add more stimulus to the economy. Trade balance for the month of April widely missed the expectations coming in at $13.84bn vs $34.56bn as expected. Exports were down on the year -2.7% y/y vs 3% y/y as expected, led by falls in smart devices as well as cars and related parts and imports beat the expectations by rising 4% y/y vs -2.1% y/y as expected. Imports were supported by crude oil. A huge drop in the trade surplus may prompt authorities to reconsider their position in negotiations with US. CPI for the month of April came in at 2.5% y/y as expected. It is an increase from 2.3% y/y the previous month and it was driven by food prices.

Trade balance came in at AUD4949m vs AUD4480m for a nice beat on the headline number but it was achieved by both falling exports and falling imports. Retail sales for the month of March came in at 0.3% m/m vs 0.2% m/m as expected. Retail sales excluding inflation for Q1 came in weaker than expected at -0.1% q/q and this will negatively reflect on Q1 GDP.

RBA has decided to leave the cash rate unchanged at 1.5%. They acknowledged that inflation is noticeably lower than expected and that further improvement in the labour market is needed in order to reach the inflation target. Conditions remain soft, especially in housing market and domestic uncertainty remains around household spending and falling housing prices. They expect economy to grow at 2.75% in 2019, lower than 3% previously and inflation to be 1.75% in 2019 from 2% previously and 2% in 2020 from 2.25% previously. Assessment is that outlook for global economy is reasonable with risks tilted to the downside.

This week we will have employment and wages data from Australia as well as consumption, industrial and investment data from China. Federal elections in Australia will be held on Saturday.

Important news for AUD:


  • Wage Price Index
  • Retail Sales (China)
  • Industrial Production (China)
  • Fixed Asset Investment (China)


  • Employment Change
  • Unemployment Rate


The GDP price auction came in at 0.4% thus continuing impressive streak of 11 consecutive months of rising dairy prices. Electronic card spending for the month of April came in at 0.6% m/m vs 0.8% m/m as expected. This measure is the main measure of retail sales in New Zealand.

RBNZ has cut its cash rate 25bp to 1.50%. They now see official cash rate down to 1.38% in June of 2020 and 1.36% in September of 2020 thus making further rate cuts possible. Annual CPI is still seen at 1.7% by June 2020. Committee has reached the decision to cut rate by consensus due to weak domestic demand, projected growth and employment headwinds. Additional monetary stimulus is needed. Key downside risk was a larger than anticipated slowdown in global economic growth, particularly in China and Australia. Governor Orr stated that US – China war is one of RBNZ’s major concerns and he is surprised by weaker downturn in business sentiment and consumer spending.

This week we will have manufacturing PMI data.

Important news for NZD: 


  • Business NZ Manufacturing PMi


Ivey manufacturing PMI came in at 55.9 vs 54.3 for a nice beat. Although it is notoriously volatile data it still shows positive results from Canadian economy. New housing price index came in at 0.1% y/y as expected. Trade balance for the month of March came in at -$3.21bn vs -$2.4bn as expected. Exports rose 3.2% with energy and motor vehicles as leaders while imports rose 2.5% on the back of consumer goods. Canada-US surplus widened to $3.6bn while deficit with the rest of the world widened to all time worst at $6.8bn.

Canadian employment report smashed expectations coming in at 106.5k vs 11.6k as expected, almost 10 times better than expected, for the biggest one-month jobs gain on record since 1976. Full-time employment came in at 73k while part-time employment came in at 33.6k. Participation rate climbed to 65.9% vs 65.7% the previous month and the unemployment rate ticked down to 5.7%. Drop in the unemployment rate is more impressive given the rise in the participation rate. Hourly wage for permanent employees came in at 2.6% vs 2.3% as expected.

This week we will have inflation data, manufacturing sales data and review of financial system from BOC.

Important news for CAD:




  • Manufacturing Sales
  • BOC Financial System Review


Final manufacturing PMI for the month of April came in at 50.2 vs 49.2 the previous months. This is a 3-month high and it puts the manufacturing sector back into expansionary territory. Business confidence continues to rise, however new orders and output fell. Services PMI dropped a bit to 51.8 but overall composite was higher at 50.8 vs 50.4 the previous month. Household spending for the month of March came in at 2.1% y/y vs 1.6% y/y as expected as for a beat, however wages dropped heavily coming in at -1.9% y/y vs -0.5% y/y as expected. Increase in household spending is positive for inflation but it cannot be sustained if wages continue dropping.


The unemployment rate came in at 2.4% as expected reflecting once again tight labour market condition in the Swiss economy.

You can follow all economic events on the Economic Calendar page on our Website. MT4 server time is set to GMT+3 and if you need assistance converting MT4 server time to your local time you can use some of the online time converters such as WorldTimeBuddy.

Please note that this analysis should not be used as investing advice as it is only an overview of the economic events influencing the markets.
Please remember that MT4.VAR. and MT4.ECN. accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.

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