<\/em><\/p>\n\n\n\n
\u201cThe release of the US PCE rates brings attention back to the dollar in the coming week. Moreover, with trade tensions far from over, the announcements from the US could influence the markets next week. \u201d<\/em><\/p>\n\n\n\n We make a start for pound traders by noting that on a macroeconomic level, the UK\u2019s CPI rates for April which were released on Wednesday came in hotter than expected both on a core and on a headline level. The hotter than expected inflation print showcased an acceleration of inflationary pressures in the UK economy, which may increase pressure on the BoE to withhold from cutting interest rates further and thus may have aided the pound.<\/p>\n\n\n\n On a monetary level, the hotter than expected inflation print may have raised some concern amongst BoE policymakers, with BoE Chief Economist Pill stating prior to the release of the UK\u2019s inflation print that the bank may have started cutting rates \u201cslightly to early\u201d last year. Thus, we would not be surprised to see BoE policymakers adopting a slightly more cautionary tone which may be perceived as hawkish in nature and could thus aid the pound.<\/p>\n\n\n\n On a fundamental level, the announcement that the EU and the UK have agreed to a new post Brexit reset trade deal, may be perceived as a positive for EU-UK relations and may pave the way forward for more fruitful trade negotiations with the EU. Thus, the positive developments may aid the UK Equities markets.<\/p>\n\n\n\n Analyst\u2019s opinion (GBP)<\/em><\/p>\n\n\n\n \u201cOverall the persistent inflationary pressures in the UK economy may increase pressure on the bank to ease on their dovish monetary policy stance, which in turn could aid the pound\u201d<\/em><\/p>\n\n\n\n On a macro level we note that Japan’s CPI rates for April were released earlier on today. The nation\u2019s inflation print came in hotter than expected on a core level, at 3.5% versus 3.4%. The hotter than expected inflation print may increase pressure on the bank to resume on its rate hiking path in order to combat the acceleration of inflationary pressures in the economy. In turn this may aid the JPY. For next week, traders may be looking forward to the release of the Tokyo CPI rates for May. Despite the release being for the month of May, it still provides valuable information into the inflation picture in Japan and thus should the Tokyo CPI rates showcase an acceleration of inflationary pressures, it may amplify calls for a BOJ rate hike which may aid the Yen. On the other hand, should the CPI rates showcase easing inflationary pressures it may have the opposite effect which may weigh on the JPY.<\/p>\n\n\n\n On a monetary level , BOJ Governor Ueda has refrained from hinting at action over the recent surge in the Japanese Bond-Yields which reached record highs. Per Bloomberg the Governor stated that \u201cI want to refrain from commenting on specifics on short-term moves in bond yields\u201d but he will \u201ckeep watching them closely\u201d. Nonetheless, policymakers may also be looking forward to next week\u2019s Tokyo CPI rates which we previously mentioned<\/p>\n\n\n\n Analyst\u2019s opinion (JPY)<\/em><\/p>\n\n\n\n \u201cInflation remains elevated in the Japanese economy and thus attention turns to the Tokyo CPI rates next Friday\u201d<\/em><\/p>\n\n\n\n On a monetary level, we highlight the comments made by ECB policymaker Stournaras who stated that he sees a June rate cut and then the bank remaining on pause. The comment by ECB member Stournaras that he sees a June rate cut, is dovish in nature and may weigh on the EUR. However, the implications that the bank may remain on hold in their following meeting and possibly remain on hold for a period of time, may be perceived as hawkish in nature and could overshadow the dovish remarks and could provide support for the EUR as the week comes to a close. Lastly, the announcement today that the US may be imposing a 50% tariff on EU exports to the US, may raise worries for the ECB and may further increase pressure on the bank to adopt a more cautionary monetary policy approach.<\/p>\n\n\n\n On a macro level we note the release of the preliminary PMI figures for May with a special interest being placed on Germany\u2019s manufacturing sector figure which despite showcasing some improvement from 48.4 to 48.8, it still remains in contraction territory. Moreover, France\u2019s preliminary services PMI figure showcased a wider contraction than what was expected and lastly, the Euro Zone\u2019s Composite PMI figure entered contraction territory implying a reduction of economic activity across sectors in the area and thus all three combined may have weighed on the EUR. Yet the confirmation of the expected acceleration in inflation for the Zone for the month of April and the better-than-expected German GDP rates for Q1, may have masked over the aforementioned PMI figures and taken the stage, which may have overall provided support for the EUR when taking everything into account. Lastly, the release of Germany\u2019s and France\u2019s preliminary HICP rates for May next week are set to be crucial considering the ongoing trade war between the EU and the US as well as the shaky economic outlook for the Zone.<\/p>\n\n\n\n Analyst\u2019s opinion (EUR)<\/em><\/p>\n\n\n\n \u201cThe announcement that the US may be imposing a 50% tariff on EU exports to the US starting next month, showcases how volatile the trade situation still is. Moreover, in spite of Germany\u2019s better than expected GDP rate which was released today, the PMI figures for France, Germany and the Zone are still a concern especially when we take into account the confirmation of the acceleration of inflationary pressures in the Zone from a yoy perspective on a core level. \u201d<\/em><\/p>\n\n\n\n On a macroeconomic level, we note the release of Australia\u2019s CPI rates for April next Wednesday the 28th of May which may garner attention from Aussie traders. The release of the CPI rates could influence the Aussie\u2019s direction, considering the importance of the inflation print. Should the CPI rates showcase an acceleration of inflationary pressures in Australia, it may aid the Australian dollar and vice versa.<\/p>\n\n\n\n The bank in its accompanying statement noted that \u201cInflation is in the target band and upside risks appear to have diminished\u201d and seems to be cautiously ready to deliver more rate cuts in the coming months, depending on the developments of inflation and the labour market. The release weighed on the Aussie and any dovish comments by RBA policymakers could renew bearish tendencies for AUD.<\/p>\n\n\n\n On a fundamental level, we note that the improvement of the market sentiment created by the US- Sino trade ongoing trade talks, which may have provided some support for the AUD given their close economic ties with China. Specifically, the high levels talks between the US and China since their Geneva meeting.<\/p>\n\n\n\n Analyst\u2019s opinion (AUD)<\/em><\/p>\n\n\n\n \u201cThe key issue for AUD may be the release of Australia\u2019s CPI rates for April next Wednesday. Should the CPI rates showcase an acceleration of inflationary pressures in the Australian economy it could aid the Aussie.\u201d<\/em><\/p>\n\n\n\n On a monetary level, BoC Governor Tiff Macklem stated that \u201cI expect the second quarter will be quite a bit weaker\u201d. It appears that the bank still remains concerned over the implications of the US\u2019s trade policy as it may blurr the nations future economic outlook. In turn the Governor\u2019s comments may be perceived as hawkish in nature, which could aid the Loonie.<\/p>\n\n\n\n On a macroeconomic level, we note that Canada\u2019s CPI rates for April which were released on Tuesday came in hotter than expected on a core and headline level. Specifically the Core CPI rate on a year-on-year basis accelerated to 2.5% versus the prior rate of 2.2% and the headline rate cmae in hotter than expected at 1.7% versus 1.6% yet was still lower than the prior months rate of 2.3% Overall the implications of the Core CPI rate acceleration may have aided the Loonie. For next week, Loonie traders may be interested in the release<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2025\/05\/image-79.png\")
<\/figure>\n\n\n\nGBP \u2013 UK CPI rates come in hotter than expected<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/05\/image-80.png\")
<\/figure>\n\n\n\nJPY \u2013 Japan\u2019s CPI rates come in hotter than expected<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/05\/image-81.png\")
<\/figure>\n\n\n\nEUR \u2013 ECB June rate cut?<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/05\/image-82.png\")
<\/figure>\n\n\n\nAUD \u2013 RBA cuts rates as expected<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/05\/image-83.png\")
<\/figure>\n\n\n\nCAD \u2013 Canada\u2019s CPI rates come in hotter than expected<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/05\/image-84.png\")
<\/figure>\n\n\n\n