FUNDAMENTAL REVIEW FOR THE WEEK (May 20 - May 27, 2024)

The past week was strictly dictated by “risky” buyers - the dollar received a particularly painful "bearish punch" on Wednesday, when published data on consumer prices recorded a decrease of 0.1% in monthly equivalent. With the labor market weak at the start of the month, this gives the Fed carte blanche to cut rates earlier and more aggressively this year - a very important boost to the medium-term depreciation of the US dollar.

The week begins against a backdrop of significant geopolitical unrest.

Just a couple of hours ago, news came that Iranian President Ebrahim Raisi was killed in a helicopter crash in the Iranian province of East Azerbaijan on May 19. Now it is important to understand how much this sad fact will affect the balance of geopolitical forces, especially under the prism of the conflict between Israel and Hamas, where many saw the “hidden hand” of Iran.

And in Israel itself, the situation is tense - the government of Prime Minister Netanyahu is in danger of collapse, since Minister Gantz, a member of the Israeli military cabinet, presented an ultimatum to the prime minister on Saturday and said that his party would leave the government. government if the cabinet does not approve a strategy for the war in Gaza by June 8. On the other hand, the United States is already putting pressure on Netanyahu to end the conflict. As a result, the likelihood of early elections in Israel increases against the background of the potential resignation of the current political elite.

❗️This geopolitical agenda needs to be closely monitored - as a potential escalation of the Middle East conflict could instantly return interest in the US currency ❗️

The coming week will be "mic week" as the calendar calls for daily public appearances by Fed members. As for economic reports, there will be no direct super strong data. Among the most important indicators that are not yet “on the market” (for example, the Fed minutes on Wednesday) are the business activity indices in the EU and the US on Thursday, as well as applications for unemployment benefits in the US on the same day.

Japanese inflation data is scheduled for Friday, as well as German GDP and UK retail sales data. US durable goods will end the five-day trading period in the afternoon. To summarize, it can be noted that the main “load” in terms of trading volatility will occur in the second half of the week on the above reports.

Good luck and informed investment decisions!