U.S. Retail Sales in Focus, BOE and RBNZ to Announce Rate Decisions

U.S. shares advanced on Friday, closing higher for a third straight week. While the S&P 500 gained more than 0.4 percent to end at a record high close at 2,399.29, the Dow Jones Industrial Average rose 0.26 percent to 21,006.94 and the Nasdaq Composite added 0.42 percent to 6,100.76.

U.S. markets were boosted by upbeat nonfarm payrolls that were reported on Friday to surge by 211,000 jobs last month after a paltry gain of 79,000 in March. The unemployment rate dropped to 4.4 percent in April from 4.5 percent recorded in the previous month, heading closer to a 10-year low. Average hourly earnings added 0.3 percent in the reported period, in line with expectations.

In the week ahead, the U.S. Commerce Department will publish data on April retail sales, which accounts for as much as 70% of the world’s largest economic growth, on Friday. Market anticipated that the report will point to a rise of 0.6% last month, reversing higher from two straight declines. Meanwhile, core sales are forecast to edge up 0.5%, after holding flat a month earlier.

Also on Friday, the Commerce Department is due to publish April inflation figures which are expected to jump 0.2%. Core inflation, which excludes food and energy, is forecast to increase 0.2%, sending the figure 2% higher on a yearly base – the goal target of the Federal Reserve.

Before the releases of the inflation and retail sales reports, next week’s U.S. calendar also features data on JOLTS Job Openings about to be published on Tuesday and on producer price due on Thursday.

Turning to the British Pound, the Bank of England is scheduled to announce its rate decision at on Thursday with analysts expecting that the central bank will remain cautiously waiting to see how EU divorce negotiations pan out and therefore no change in policy is expected. The Quarterly Inflation Report will be reported by the central bank will also publish its Quarterly Inflation Report on Thursday.

Following the rate announcement from the BOE on Thursday, traders will await monthly manufacturing and industrial production figures which are anticipated to decline by 0.2 and 0.4 percent on a monthly basis, respectively. Further indications on the effect of the Brexit decision on the economy will be in the spotlight given these reports.

The euro jumped nearly 100 pips last week to trade at the strongest level since early November in late trade. Indeed, the pair EURUSD soared to 1.09990 on Friday – the highest level in nearly 6 months amidst optimism over the likely outcome in the French presidential elections.

The second round of the French Presidential Election between pro-European Union centrist Emmanuel Macron and anti-EU, anti-immigration far-rightist Marine Le Pen win was held on Sunday. Surveys polled on Friday showed Macron ahead by 62% to 38%. The leading of Macron was seen as a sign that political risk in Europe is receding, which helped boosted the euro and European stocks.

After the French election’s second round’s result, there will also be German, French and Italian industrial production data for investors to assess the economy growth of the bloc.

The Reserve Bank of New Zealand’s monetary policy update is due on Wednesday. The central bank is expected to hold its benchmark interest rate at the current all-time low of 1.75%. RBNZ Governor Wheeler will hold a press conference following the decision.

China is to release April trade figures on Monday with the report being expected to show that the country’s trade surplus widened to $35.5 billion last month from a surplus of $23.9 billion in March. The report may show that exports rose 10.4% in April from a year earlier, following a jump of 16.4% a month ago, while imports are anticipated to surge dramatically 18.0%, after increasing 20.3% in March.

China will also publish data on April consumer and producer price inflation on Wednesday. Consumer prices are expected to rise 1.1% last month, while producer prices are forecast to increase by 6.9%.

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