NORTH AMERICA IN THE SPOTLIGHT ON FRIDAY
Economic data and monetary policy will make headlines on Friday, with North America seeing the most potential in terms of impact. That said, a policy-oriented speech from Europe is expected to generate significant headlines.
On the data front, Europe has very little to offer on Friday. The Spanish government will release a pair of inflation figures at 07:00 GMT, which could provide a snapshot of regional consumer price trends. Spain’s consumer price index (CPI) is forecast to rise 0.8% in April, translating into a year-over-year growth rate of 1.1%. Spain’s harmonised index of consumer prices (HICP) is forecast to rise by a similar amount.
European Central Bank (ECB) Governor, Mario Draghi, will deliver a speech shortly after North American markets begin trading. The ECB head presided over the recent decision to keep interest rates on hold. The ECB is monitoring a sharp pick up in economic activity, though significant downside risks remain.
In terms of North American data releases, the US Department of Labor will report on export and import prices on Friday. Washington’s export price index is forecast to rise 3.6% in the 12 months through April, up from 3.4% the month before.
Later in the session, the University of Michigan will produce the May edition of its consumer sentiment index. The sentiment indicator is projected to edge down slightly to 98.5 for May from 98.8 the month before.
North of the border, the Canadian government will release its monthly employment report at 12:30 GMT. Canada’s unemployment rate is forecast to hold steady at 5.8% as 17,400 jobs are added to the economy.
Energy traders will also be keeping tabs on the weekly rig count data courtesy of Baker Hughes Inc. With oil prices surging, US shale producers are chomping at the bit to reactivate their production.
Europe’s common currency bottomed in the low 1.1830 US region on Thursday before rebounding later in the session. EUR/USD was last seen trading at 1.1914, where it was virtually unchanged from the previous close. Prices are supported at 1.1880. On the opposite side of the ledger, immediate resistance is located at 1.1960.
Rising oil prices lifted the Canadian dollar to three-week highs on Thursday, as the USD/CAD exchange rate plunged back below 1.2800. The pair is now trading around 1.2770 after shedding more than 200 pips from its recent high. Canadian employment data will provide much of the catalyst on Friday.
Cable weakened on Thursday after the Bank of England kept monetary policy on hold in a 7-2 vote. GBP/USD bottomed below 1.3430 but has since recovered to trade at 1.3523. The trading outlook is highly choppy, with pound sterling susceptible to bigger downside risks in the short term.