Highly anticipated economic reports are set to be released this week, including the Bank of England Rate Statement, US Consumer Price Index (CPI), and US Producer Price Index (PPI). These reports are vital, providing traders and investors with essential data and ensuring they stay ahead of the dynamic market.

Consumer Price Index | US (10 May)

CPI in the US rose by 0.1% in March 2023, showcasing a slowdown in increment from February’s 0.4% increase.

According to analysts, the CPI reading for April—which will be released on 10 May—is expected to rise by 0.3%.

Takeaway: Following the negative market reaction to the Fed rate decision, the market will now be closely watching the Consumer Price Index. If the results align with the forecast, we can anticipate a slight boost to the US dollar.

Bank of England Rate Statement | UK (11 May)

During its March 2023 meeting, the Bank of England raised its key bank rate by 25bps to 4.25%, with the objective of bringing inflation back to the 2% target. 

Some analysts expect the next rate hike will be by another 25bps to 4.50%.

Takeaway: Based on last month’s hawkish inflation and wage data, the Bank of England is expected to implement another 25 basis-point rate hike. However, due to recent comments by the bank on the delayed impact of prior tightening measures, the criteria for further actions have increased. Unless there is negative economic news in the next few weeks, we predict that there will be no further adjustment in June.

Producer Price Index | US (11 May)

Producer prices for final demand in the US decreased by 0.5% month-on-month in March 2023, the largest drop since April 2020. 

The PPI data for April will be released on 11 May, with analysts expecting an increase of 0.3% from the previous month. 

Takeaway: Following the negative reaction of the market to the Fed rate decision, the focus now shifts to the Producer Price Index. If the result aligns with the forecast, we can anticipate a slight boost for the US dollar.

Gross Domestic Product | UK (12 May)

The UK economy experienced a halt in February 2023, after achieving upward growth of 0.4% in January. 

The GDP figures for March, due to be released, is expected to show an increase of 0.1%.

Takeaway: The Bank of England will rely on the latest UK GDP figures to help determine their next interest rate decision. The release of this data, if it’s in line with expectations, could potentially slow down the GBPUSD exchange rate. However, it could also signal the central bank to keep the interest rate unchanged in the next meeting.

Prelim University of Michigan Consumer Sentiment | US (12 May)

The University of Michigan’s US consumer sentiment came in at 63.5 in April 2023, up from 62 in March.

For May, analysts expect a reading of 64. 

Takeaway: The market closely watches consumer sentiment as it serves as an indicator of the public mood in the US. If the data release meets the forecast, we may see a boost for the US dollar.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

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This week, market participants await the release of highly awaited economic reports, which will highlight key indicators such as Rate Statements in the US and Australia, as well as Employment Change in the US and Canada. These reports have immense significance as they enable traders and investors to make informed decisions and stay ahead of the market. 

ISM Manufacturing PMI | US (May 1)

The US ISM Manufacturing PMI fell to 46.3 in March 2023, the lowest since May 2020.

Analysts expect a reading of 46.6 for April 2023. 

Reserve Bank of Australia Rate Statement (May 2)

During its April meeting, the RBA held its cash rate steady at 3.6%, in line with market expectations. This marks the first pause in the current hiking cycle, which began in May 2022. 

For April, analysts expect the central bank to keep the rate unchanged at 3.6%. 

ISM Services PMI | US (May 3)

The US ISM Services PMI dropped to 51.2 in March 2023 from 55.1 in February 2023, the slowest growth in three months. 

For April, analysts expect a reading of 50.6.

FOMC Meeting and Funds Rate | US (May 3)

The Fed raised its funds rate by 25bps to 5% in March 2023. 

Despite a slower inflation rate, analysts anticipate that the central bank will continue to raise interest rates, with another 25bps hike to 5.25% in April 2023. 

European Central Bank Main Refinancing Rate (May 4)

Most ECB policymakers agreed to raise key interest rates by 50bps to 3.5% last month, though some members would have preferred not to increase them until the financial market tensions had subsided. 

The ECB is set to deliver a 25bps rate hike in its May meeting, with further increases expected to be implemented in subsequent meetings.

Employment Change | Canada (May 5)

The Canadian economy added 35,000 jobs in March 2023, while the unemployment rate remained unchanged at 5% for the fourth consecutive month. This is near the record low of 4.9% seen in June and July 2022. 

For  April  2023, it is anticipated that job creation numbers will drop slightly to 25,000. The unemployment rate is expected to be at 5.1%.

Employment Change | US (May 5)

The US economy created 236,000 jobs in March, the least since December 2020. Meanwhile, the unemployment rate edged down to 3.5% in March 2023.

Analysts expect the US to create 190,000 jobs in April 2023, while the unemployment rate will be at 3.5%. 

Dear Client,

Please note that the component stocks in the stock index spot generate dividends. When dividends are distributed, VT Markets will make dividends and deductions for the clients who hold the trading products after the close of the day before the ex-dividend date.

Indices dividends will not be paid/charged as an inclusion along with the swap component. It will be executed separately through a balance statement directly to your trading account, the comment for which will be in the following format “Div & Product Name & Net Volume ”.

Please note the specific adjustments as follows:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com

Market participants anticipate several critical economic reports this week, including the BOJ Rate Statement, US Advance GDP, and Core PCE Price Index. These key reports will provide valuable insights and help investors and traders make informed decisions. Don’t miss out on this opportunity to stay ahead of the curve.

Here are the key events to watch out for:

Consumer Price Index | Australia (April 26)

The annual inflation rate in Australia rose to 7.8% in Q4 2022 from 7.3% in Q3 2022. 

For Q1 2023, analysts expect a more moderate increase of 6.8%.

Advance GDP | US (April 27)

The US economy expanded at an annualised rate of 2.6% in Q4 2022. 

For Q1 2023, analysts predict a rate of 2.3%.  

BOJ Rate Statement | Japan (April 28)

During its March meeting, the Bank of Japan unanimously voted to keep its key short-term interest rate at -0.1% and the rate for 10-year bond yields at around 0%.

This month, analysts expect that the rate will stay the same as the board introduces new quarterly growth and price estimates in Kazuo Ueda’s first policy meeting.

Prelim Consumer Price Index | Germany (April 28)

Germany’s consumer price inflation reached a seven-month low in March 2023, recording a year-on-year rate of 7.4%, down from 8.7% in the previous two months. The figure remained well above the European Central Bank’s target of 2%. 

Analysts predict a further decrease in April 2023, with an expected rate of 7.0%.

Gross Domestic Product | Canada (April 28)

Canada’s economy jumped 0.5% in January 2023, following a slight contraction of 0.1% in December 2022. 

For February, analysts expect it to increase by 0.3%.

Core PCE Price Index | US (April 28)

Core PCE prices in the US, which exclude food and energy, rose by 0.3% month-on-month in February 2023, following a downward revision of 0.5% in the previous month.

For March 2023, analysts expect a 0.4% increase. 

Employment Cost Index | US (April 28)

Compensation costs for civilian workers in the US rose 1% in Q4 2022, a third straight slowdown, compared to a 1.2% increase in the previous quarter.

For Q1 2023, analysts expect the index to rise by 0.8%.

Dear Client,

Please note that the component stocks in the stock index spot generate dividends. When dividends are distributed, VT Markets will make dividends and deductions for the clients who hold the trading products after the close of the day before the ex-dividend date.

Indices dividends will not be paid/charged as an inclusion along with the swap component. It will be executed separately through a balance statement directly to your trading account, the comment for which will be in the following format “Div & Product Name & Net Volume ”.

Please note the specific adjustments as follows:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com

What Are Retail Sales? 

Retail sales refer to the total amount of merchandise or goods sold to customers by a retailer. This can include a wide range of items, such as clothing, electronics, furniture, and more. Retail sales are an important indicator of the health of the economy, as they represent consumer spending, which accounts for a significant portion of overall economic activity.

In the United States, retail sales are closely monitored and reported by the government and other organizations as a key economic indicator. 

Understanding Retail Sales 

Retail sales data gives insights into customer behavior and buying habits. Retailers use it to make informed decisions about inventory, marketing, and pricing. Analyzing data also helps identify trends and changes in consumer preferences. This information is critical for product development and market expansion.

Additionally, retail sales data can be used by investors, policymakers, and economists to assess the overall health of the economy and make predictions about future growth and performance. 

How Is Retail Sales Data Calculated

Retail sales data is typically collected through a combination of surveys, point-of-sale (POS) systems, and other sources. The U.S. Census Bureau conducts a monthly survey of retail establishments to gather information on sales and inventory levels. This survey includes both brick-and-mortar stores and online retailers and covers a wide range of product categories.  

In addition to the survey data, the Bureau of Economic Analysis (BEA) also incorporates data from POS systems and other sources to create a comprehensive estimate of retail sales for a given period. 

How Does Inflation Impact Retail Sales

Inflation can have a significant impact on retail sales, as it affects the purchasing power of consumers. When prices rise due to inflation, consumers may be less likely to make discretionary purchases and may focus on purchasing only essential goods. This can lead to a decline in retail sales, which can have a ripple effect on the economy as a whole.  

On the other hand, low inflation can stimulate retail sales by making goods more affordable for consumers. Understanding the relationship between inflation and retail sales is critical for retailers, investors, and policymakers to make informed decisions about pricing and economic policies. 

Why Are Retail Sales Important

Retail sales are important for the economy because they show how much consumers are spending, which is a big part of economic activity. When retail sales are strong, it is usually a good sign for the economy because it suggests that consumers are confident and that the economy is growing.

Conversely, weak retail sales can be a sign of economic contraction, as consumers may be less willing to spend money during times of uncertainty or financial strain.  

Retail sales data is also closely watched by investors, as it can provide insights into the performance of individual companies and industries. 

Understanding the Basics of Rate of Inflation 

Rate of inflation refers to the percentage change in the general price level of goods and services in an economy over a specific period, usually a year. It is a key economic indicator that measures the rate at which prices are increasing, and it affects consumers, businesses, and the overall economy. A higher rate of inflation means that the same amount of money buys fewer goods and services, reducing purchasing power and potentially leading to economic instability.

Different Types of Inflation 

There are several types of inflation, and understanding each type is important to determine the appropriate course of action. 

One of the types of inflation is cost-push inflation, which occurs when the cost of production rises, leading to higher prices for consumers.  

Another type is demand-pull inflation, which occurs when the demand for goods and services exceeds the supply, resulting in higher prices.  

Deflation occurs when the rate of inflation goes negative, leading to a decrease in prices. 

Disinflation refers to the decrease in the rate of inflation over time.  

Reflation is the opposite of deflation, and it occurs when there is an increase in the rate of inflation after a period of deflation.  

Creeping inflation refers to a slow increase in the rate of inflation, while walking inflation refers to a moderate increase in inflation.  

Running inflation refers to a sudden and rapid increase in the rate of inflation.  

Finally, hyperinflation occurs when the rate of inflation becomes extremely high, leading to a loss of value of the country’s currency. 

The Effects of Rate of Inflation on the Economy 

The rate of inflation has a significant impact on the economy. When inflation is high, the cost of goods and services increases, which reduces purchasing power. This, in turn, leads to a reduction in demand for goods and services, leading to a decrease in production and eventually leading to unemployment. The increase in prices of goods and services also results in a decrease in the value of money. 

Inflation can also lead to higher interest rates, as central banks try to control the rate of inflation. This, in turn, leads to an increase in the cost of borrowing, making it more difficult for businesses to obtain loans to finance their operations. Additionally, inflation can also lead to an increase in the cost of living, leading to a decrease in the standard of living. 

Measuring Rate of Inflation 

The rate of inflation is typically measured by calculating the percentage change in the price level of a basket of goods and services over a period of time. There are different ways to measure the rate of inflation, but the most common methods are the Consumer Price Index (CPI) and the Producer Price Index (PPI).

The CPI measures the average price change of a basket of goods and services typically consumed by households. The goods and services included in the CPI are weighted according to their relative importance in the average household’s expenditure. The CPI is usually calculated on a monthly basis and is used to measure changes in the cost of living over time.

The PPI, on the other hand, measures the average price change of goods and services at the producer level before they reach the consumer. The PPI includes goods and services used in the production process, as well as intermediate goods and services. The PPI is often used as a leading indicator of future changes in the CPI.

To calculate the rate of inflation, you would compare the CPI or PPI from one period to another, usually a month or a year, and calculate the percentage change. For example, if the CPI was 100 in January and 105 in February, the rate of inflation would be (105-100)/100 = 5%.

Protecting Against the Rate of Inflation 

There are different ways of protecting against the rate of inflation. One way is to invest in assets that increase in value with inflation, such as real estate, stocks, and commodities. Another way is to invest in bonds, which can provide a steady stream of income and help offset the effects of inflation. 

Additionally, it is important to diversify investments across different asset classes to spread the risk. Another way to protect against inflation is to save in high-yield savings accounts or certificates of deposit (CDs) that offer interest rates that keep up with inflation. 

What is the Purchasing Managers’ Index (PMI) 

The Purchasing Managers’ Index (PMI) is an economic indicator that measures the health of a country’s manufacturing sector. It is based on a survey of purchasing managers in the manufacturing industry and provides valuable insight into the state of the economy. The PMI is considered a leading indicator, as it can signal changes in economic activity before they become apparent in official economic data. 

How the Purchasing Managers’ Index Works 

The PMI is based on a survey of purchasing managers in the manufacturing industry. The survey asks purchasing managers to rate various aspects of their business, such as new orders, production levels, employment, and prices. The answers are then compiled into a single index number that represents the health of the manufacturing sector. 

The PMI is calculated on a scale of 0 to 100, with a score above 50 indicating expansion in the manufacturing sector, and a score below 50 indicating contraction. The PMI is broken down into sub-indices for new orders, production, employment, supplier deliveries, and inventories. 

How the PMI Affects Economic Decisions 

The PMI is closely watched by economists, investors, and policymakers, as it provides valuable information on the state of the economy. A high PMI reading suggests that the manufacturing sector is expanding, which can lead to increased employment, higher wages, and a stronger economy. A low PMI reading, on the other hand, suggests that the manufacturing sector is contracting, which can lead to job losses, lower wages, and a weaker economy. 

Policymakers use the PMI to guide economic policy decisions. For example, if the PMI indicates that the economy is weakening, policymakers may consider lowering interest rates or implementing fiscal stimulus to stimulate economic growth. 

Why is PMI important

The PMI is an important economic indicator because it provides real-time information on the health of the manufacturing sector. The manufacturing sector is a critical component of most economies, as it provides jobs and drives economic growth.

A strong PMI reading suggests that the manufacturing sector is expanding, which can have positive spillover effects on other sectors of the economy. A weak PMI reading, on the other hand, suggests that the manufacturing sector is contracting, which can lead to job losses and lower economic growth. 

The PMI is also important for investors, as it provides information on the performance of individual companies and sectors. For example, a high PMI reading for the technology sector may signal that technology stocks are likely to perform well in the coming months. 

When is PMI released

The PMI is released on a monthly basis by a number of different organizations, including Markit and the Institute for Supply Management (ISM).

The PMI is typically released on the first business day of the month and covers the previous month. For example, the PMI for January would be released on the first business day of February. Investors and economists closely watch the PMI release date, as it can have a significant impact on financial markets.