Weekly Outlook | Positive Risk Sentiment Continues

Important events this week:

Markets are likely going to be influenced by the ongoing tariff situation initiated from the US. President Trump indicated further that he might offer discounts to China as they are seemingly open for talks to find a solution. In the meantime, a trade deal has been made with the UK, where tariffs on have been reduced to 10% according to statements.

Meanwhile the FED has left interest rates unchanged last week as previously anticipated. The statement might further show significance as Jerome Powell might want to point out that the Central Bank will remain independent of political decisions.

This week will feature only a limited range of important data, as we will analyze below, which is likely starting to be influenced by US tariffs. 

– US – consumer price data– US consumer prices continue to be important for financial markets. Due to the recent implementation of tariffs on several imports into the US prices should be expected to rise. The data is expected to come in at 0.3%, which would be a rise from the 0.1% increase last month. The added tariffs on many goods imported in the US might add another burden, which is expected to cause a rise in prices. 

The EURUSD currency pair might hence be interesting. After the recent push higher, the market has stalled at current levels. A further slide might hence be on the cards.

EURUSD weekly chart

The weekly chart shows that the price continues to be capped below the psychological zone of 1.1500. A further slide in prices might be expected towards the area of 1.1150. If that area gives way, then even lower prices might be seen. A stronger reading might support the bearish view. The data will be released on Tuesday, the 13th of May at 14:30 CET.

– US core producer price index– The producer price index is equally interesting compared with the above data. After the index has shown a contraction at the last release, another rise is expected during this month. Various imported goods for the production industry might also lead to a rise in prices here. The delay in tariffs for 90 days for the time being might not cause a significant impact, yet. However, as many goods are imported from China a rise is simply inevitable, as tariffs have been implemented already.

S&P 500 weekly chart

The S&P 500 index continues to rise further but the weekly chart shows, that prices are currently capped below the 50- moving average based on the weekly chart. A rise above the zone at 5,750 might cause the positive trend to continue. The candlestick pattern might support such view, whereas a break below 5,570 could also cause prices to weaken again. The data will be released on Thursday, 15th May at 14:30 CET.