This week brings key economic data and central bank decision likely to stir volatility in FX markets.
As inflation diverges and policy paths fragment, traders should watch closely for pivotal events impacting AUDUSD, GBPUSD, and USDJPY.
Each currency pair will react uniquely based on domestic drivers and broader global sentiment shifts. Staying informed on these developments can help identify potential price swings and align trades with evolving macroeconomic narratives across major economies.
Tuesday, May 20th: RBA Interest Rate Decision – AUDUSD
The Reserve Bank of Australia is expected to keep rates unchanged amid surging employment growth. However, any hawkish surprise could send the AUDUSD towards the 0.6500 mark. RBA Governor Bullock’s hints at future policy moves could potentially move AUDUSD between the 0.6312 – 0.6501 range, as per Bloomberg’s FX forecast model.
Economists predict a spike in the UK’s inflation last month: month-on-month CPI growth may have tripled to 0.9%, while the year-on-year print may have exceeded 3% for the first time in 14 months. Higher-than-expected CPI prints could see GBPUSD break above its 21-day SMA resistance to set a new 3-year high towards 1.3500.
Japan’s April core inflation is expected to tick higher to 3% in April. A higher CPI could add pressure on the Bank of Japan to hasten its next rate hike, potentially sending USDJPY towards 21-day SMA for support. However, a weaker-than-expected print could lead to a moderate dollar rebound vs. the yen i.e. USDJPY above 50-day SMA.
Here’s a comprehensive list of other key economic data and events due this week:
Monday, May 19
Tuesday, May 20
Wednesday, May 21
Thursday, May 22
Friday, May 23
