The last week of May will not be rich in publications of key macroeconomic data. However, this does not change the fact that it could be very interesting, especially in terms of geopolitics. This in turn may affect the markets, as we have seen today.
But before we move on to the last week of May, we will summarize the minutes of the last European Central Bank meeting published on Friday. The ECB believes that the economy could contract by 5-12% this year, although growth was expected to resume as the restrictive measures were gradually lifted. The central bank is fully prepared to adjust all its measures in support of the euro area economy, including increasing the size of the Pandemic Emergency Purchase Programme (PEPP) and adjusting its composition, if and as long as necessary. However, policymakers also warned that monetary policy cannot solve these problems on its own and that fiscal policy must also play a crucial role.
Meanwhile, the last week of May will start with a long weekend in the US and the UK. On Monday 25 May the two main centres of trade in the world will be turned off. However, it is worth remembering the increase in tension between the US and China and the subsequent riots in Hong Kong. Things could gain momentum this weekend, which in turn could be seen in the financial markets after the mentioned long weekend.
From macro-economic data, it will once again be worth looking at the number of applications for unemployment benefits in the USA. It is likely that next week a total of 40 million Americans could be unemployed, which may hinder the return to economic growth. Personal spending is also likely to fall significantly, as retail sales have collapsed, representing just over 40 percent of total consumer spending. Hence, further aid packages for the US economy are possible and could be announced in the near future.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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