The Week Ahead - it's all about the USD

USA: The US debt ceiling talks between Pres. Biden and Speaker McCarthy have investors on edge and the USD is jittery as a result. This week, several important US macroeconomic data will be released and could have a big impact on the US Dollar, with PMI numbers on Tuesday and Durable Goods and the PCE Price index , which is the Fed’s preferred inflation metric, on Friday, leading the way.

On Friday, US Fed Chairman Jerome Powell attended a panel discussion with former Fed Chair Ben Bernanke. Powell commented that rates may not need to rise as high given current credit stress, as a result, markets have priced out again a rate hike for June, while an initial rate cut has been delayed until September instead of July before these comments

GBP: ING Bank highlights the importance of this week: “Wednesday’s inflation data in the UK will be a make-or-break event for the Pound. If our expectations are correct and CPI data indicates enough of a cool-down in prices to convince the Bank of England to pause tightening in June, the downside risks for Sterling are quite sizeable.”

EUR: A light data-week for the Eurozone, but markets are looking to see if the ECB will stay the course, or tone down its rhetoric regarding more interest rate hikes.

NZD: A key week for the Kiwi, with interest rates announced on Thursday along with the statement from the RBNZ.