Following the first high-stake trade negotiations between China and the US, market attention will once again focus predominantly on developments between the two countries. However, the political and macroeconomic calendar warrants close scrutiny due to several key events. Among these will be the release of US inflation figures, followed by a series of crucial data points for the Eurozone, including inflation and GDP. The visit of Donald Trump to Saudi Arabia should also not be overlooked. Consequently, the key markets to watch in the coming week are the US500, EURUSD, and OIL.WTI.
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Inflation data releases are always pivotal for investors, and this is particularly true now, given the increasing risk of a marked resurgence. Significantly higher trade tariffs, primarily on Chinese goods, could exert upward pressure on inflation over the longer term. While businesses have yet to raise prices, regional Fed surveys indicate growing price pressures. The April CPI inflation report is expected to show stabilization in the headline annual reading at 2.4% year-on-year, but a notable rebound in monthly inflation is anticipated. Higher-than-expected figures could impede the indices' upward trajectory, although the ongoing trade negotiations between the US and China remain the primary driver for Wall Street sentiment. The US CPI inflation data is due on Tuesday.
EURUSD
Hopes for a de-escalation in the trade dispute between the US and China have contributed to a significant decline in the EURUSD pair. Recent concerns had centered on the possibility that a protracted trade war could trigger a move away from the US dollar as the global reserve currency. Nevertheless, the prevailing uncertainty is also intensifying pressure for further interest rate cuts within the Eurozone. This week will see the release of several important data points from a Eurozone perspective. Thursday will bring figures on GDP and industrial production, followed by trade balance data on Friday. Furthermore, Tuesday will see a meeting of European Union finance ministers, which could also influence the bloc's future stance on the ongoing trade tensions.
OIL.WTI
Crude oil experienced a substantial sell-off in April, driven by concerns surrounding the trade war and a potential global economic slowdown. Adding to this, OPEC+ decided to accelerate the restoration of oil production. On Tuesday, Donald Trump is scheduled to visit Saudi Arabia to discuss the Kingdom's investments in the United States. Saudi Arabia, likely seeking to align itself favourably with the US administration, has apparently opted to increase production with the aim of lowering oil prices. However, should the discussions prove less than optimistic, a reversal of Saudi Arabia's recent production increase cannot be ruled out. WTI crude has rebounded above $60 per barrel, partly in anticipation of a softening in relations between the US and China.
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