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The week of May 19–23 was marked by a series of key economic releases across major economies, shaping investor sentiment and currency movements. Central bank decisions, inflation updates, and PMI data highlighted varying economic conditions globally—from easing in Australia to persistent price pressures in the US and UK. Meanwhile, retail sales pointed to resilient consumer demand in both Canada and Britain. In equities, weak corporate earnings and macroeconomic uncertainty weighed on major U.S. indexes. Commodities diverged, with gold and silver surging while oil prices edged lower.
At its May meeting, the Board lowered the cash rate target to 3.85%, citing inflation’s return to the 2–3% range as justification for easing. While the decision reflects confidence in inflation staying near target, the Board signaled a readiness to adjust policy if conditions shift.
AUDUSD decreased by 0.5% compared to the previous day’s closing price.
In March, Canada’s CPI rose 2.3% year over year but slowed to 1.7% in April, mainly due to a 12.7% drop in energy prices—led by falling gasoline and natural gas costs. Excluding energy, CPI rose 2.9%. Food and travel prices climbed, while overall monthly CPI dipped 0.1%.
The USDCAD exchange rate ticked lower by 0.25% from the previous day.
In April, CPIH rose 4.1% year over year, up from 3.4% in March, while CPI increased to 3.5% from 2.6%. Both saw a 1.2% monthly rise. The main drivers were higher housing, transport, and recreation costs, partly offset by lower clothing and footwear prices. Core inflation also accelerated.
The British pound saw a modest 0.20% gain versus the US dollar since the prior session.
France’s private sector remained in contraction for the ninth consecutive month in May, with the HCOB Flash Composite PMI at 48.0. The services sector continued to drag down overall activity, outweighing a modest recovery in manufacturing output. Weak demand, falling new orders—especially in services—and sharp price discounting signaled broad economic strain. Employment declined for a sixth month, and business confidence dropped to its lowest level since April 2020. Firms cited subdued sales, client hesitancy, and geopolitical uncertainty as key concerns.
EURUSD declined 0.4% from the previous session.
Germany’s private sector returned to contraction in May, with the Composite PMI falling to 48.6 from 50.1 in April. The decline was driven by a sharper downturn in the services sector, which outweighed continued—though modest—growth in manufacturing. Export orders boosted factory output, but overall new business fell. Employment dipped slightly, and inflationary pressures eased, with output price growth at a seven-month low. Business confidence improved, especially in manufacturing, supported by hopes of stronger public spending and better trade prospects.
The euro slipped 0.40% against the pound day-over-day.
UK private sector output declined for a second month in May, though the pace of contraction eased, with the Composite PMI rising to 49.4 from 48.5 in April. Services activity edged back into growth, offsetting the steepest drop in manufacturing output since October 2023. New orders fell sharply—especially in manufacturing—amid weak domestic and export demand. Business confidence rebounded from April’s low, but hiring declined again, particularly in factories. Input cost inflation eased, as did selling prices, offering some relief. The data points to subdued growth and keeps the door open for future interest rate cuts.
GBPJPY increased by 0.23% from the previous session.
Initial jobless claims fell slightly to 227,000, down 2,000 from the prior week. The 4-week average rose to 231,500, the highest since late 2023. Insured unemployment increased by 36,000 to 1.9 million, with the 4-week average at its highest since November 2021. The insured unemployment rate held steady at 1.2%.
USDJPY rose by 0.24% compared to the previous day’s closing price.
US business activity accelerated in May, with the Composite PMI rising to 52.1 from 50.6 in April, driven by stronger service and manufacturing output. Domestic demand improved, boosting new orders, but exports declined—especially in services, which saw the steepest drop since early 2020. Prices surged, with output charges rising at the fastest pace since August 2022, largely due to tariffs. Manufacturing inventories spiked to a record high as firms braced for supply chain disruptions. Despite better sentiment, employment fell slightly, reflecting cost concerns and demand uncertainty.
The US Dollar Index increased by 0.37% on the day.
Retail sales volumes rose by 1.2% in April, driven by a strong rebound in food store sales, helped by good weather. This marks the fourth straight monthly increase and the largest three-month gain since July 2021. Sales fell in clothing and some non-food stores, while online sales dipped 0.3% after two months of growth.
GBPUSD saw an increase of 0.9% compared to the previous day.
Retail sales rose 0.8% to $69.8 billion in March, led by a 4.8% jump at motor vehicle and parts dealers. Core retail sales, excluding autos and fuel, edged up 0.2%. In volume terms, sales increased 0.9%. Gasoline station sales fell 6.5% amid lower prices. Sales grew in six of nine subsectors and eight provinces, with Quebec seeing the largest gain. E-commerce sales declined 2.1%, making up 6.0% of total retail trade.
USDCAD declined by 0.92% day-over-day.
Monday, May 19: TCOM (Trip.com Group Limited)
Tuesday, May 20: HD (The Home Depot, Inc.)
Wednesday, May 21: BIDU (Baidu, Inc.)
Trip.com reported Q1 net income of $591 million, or $0.84 per share. Adjusted earnings came in at $0.82 per share. Revenue for the quarter totaled $1.91 billion.
TCOM shares declined by 4.06% compared to the previous week.
Home Depot reported $39.9 billion in Q1 sales, up 9.4% year-over-year, with US comparable sales rising 0.2%. Net earnings were $3.4 billion ($3.45 per share), down from $3.6 billion a year ago. Adjusted EPS fell to $3.56 from $3.67.
HD shares fell by 4.75% from the previous week.
Baidu reported solid Q1 earnings on May 21, but the stock fell amid concerns over weak ad revenue and China’s economic outlook. While its core business remains strong, streaming unit iQIYI continues to drag on profits. Ad spend is declining, and ongoing investment in AI and autonomous driving may pressure future earnings.
BIDU shares decreased by 6.19% from the previous week’s closing price.
The week ending May 23 highlighted diverging economic signals across global markets. While retail sales data from Canada and the UK reflected resilient consumer demand, PMI figures from Europe signaled continued softness in business activity. Central banks remain cautious, and inflation pressures—particularly in the US—are resurfacing, in part due to tariffs. Corporate earnings offered a mixed picture, with notable stock declines despite solid reports. Commodities like gold and silver gained on safe-haven demand, while equities faced broad losses amid macro uncertainty. Overall, markets remain sensitive to both economic data and geopolitical developments.