Last week, both the FX and the equity market were quite volatile due to US inflation data. Investors began to sell stocks as they anticipated major shifts in Fed’s monetary policy. Ironically on Friday, disappointing retail sales data seemed to have calmed down investors’ hawkish fears a little bit. Retail sales in April unexpected paused with virtually no change from March. The total amount was $619.9B in April, versus the $619.8B in March, which witnessed a 10.7% surge compared with February. Sales at clothing stores declined 5.1%, online sales fell 0.6%, but sales in motor vehicles rose 2.9%. The disappointing data made USD give back more than half of its weekly gain on last Friday.
For this week ahead, we will have FOMC meeting minutes in focus. Fed officials have been busy reiterating that rising inflation will only be temporary, and investors will soon have more information regarding their next steps.