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European Markets Focus: Trends and Expectations for the Week Ahead

European markets
U.S. Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration

Stay updated on European markets, including construction, retail data, central bank actions, the Dollar, Gold, Yen, CAD, and oil prices.

The week ahead in European markets promises a mix of economic indicators and central bank actions, with investors eyeing developments in construction and retail sectors alongside monetary policy statements from key central banks. Here’s what to watch for in the coming sessions:

Construction Activity in the UK

In the UK, construction activity showed a notable rebound in the first quarter of 2024, returning to expansion in March. Investors expect this positive momentum to persist with April’s estimated figure of 50.4, indicating the second consecutive month of expansion. Should the actual data surprise the upside, it could boost the Pound during European trading hours.

Retail Sales in the Euro Area

On the other hand, retail sales in the Euro Area have been underwhelming over the past three months, with consumer spending declining notably. Disappointing retail sales figures for April could exert downward pressure on the Euro during European trading hours.

Monetary Policy Statements

Investors will closely monitor statements from central banks, including the European Central Bank (ECB), Bank of England (BoE), and Swiss National Bank (SNB). While the ECB and BoE have kept interest rates unchanged for consecutive meetings, any hints of future policy adjustments could influence market sentiment.

European Markets Focus: Trends and Expectations for the Week Ahead

US Dollar and Gold

Meanwhile, investors will closely watch Federal Reserve Bank of Minneapolis President Neel Kashkari’s remarks in the US.His commentary on future monetary policy actions could impact the Dollar Index (DXY), trading around 105.20 during Asian markets. Similarly, the trajectory of gold prices will depend on Kashkari’s remarks, with spot gold remaining capped under $2,330/oz overnight.

Japanese Yen

Japan’s services sector has been robust, expanding for 20 consecutive months. The final PMI print for April will remain unchanged, which could strengthen the Japanese Yen. USD/JPY was trading towards 154.50 at the beginning of the Asia session and is likely to maintain its upward momentum.

Canadian Dollar and Oil Prices

The Ivey PMI has been consistently strong in Canada, indicating robust economic expansion. April’s estimate of 58.1 suggests another month of expansion, which could bolster the Canadian Dollar and put downward pressure on USD/CAD. Additionally, oil prices edged higher overnight amid ongoing geopolitical tensions in the Middle East. Any further escalation of conflict could support oil prices, with WTI rebounding above $79 per barrel.

Conclusion

In the coming sessions, European markets are poised to experience volatility due to a combination of economic data releases and central bank statements. Investors will closely monitor developments in the construction and retail sectors, alongside central bank actions and geopolitical tensions, to gauge market direction.

Disclaimer: This news article does not constitute financial advice. Readers should research and consult with a financial advisor before making investment decisions.

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