Market outlook for the week of 11th - 15th May

What the desk is arguing

The desk frames this as a pivotal week for U.S. economic indicators, particularly with the core CPI data expected to show a rise to 0.3% m/m, compared to the previous 0.2%. This inflationary pressure is compounded by rising energy costs, which analysts predict could push the year-on-year CPI to 3.7% or higher, reflecting the ongoing impact of the Middle East conflict on consumer prices.

Additionally, the upcoming Fed Chair nomination vote, with Kevin Warsh likely to succeed Jerome Powell, adds another layer of uncertainty. The market will closely monitor how these developments influence the Fed's policy trajectory, especially in light of persistent inflationary pressures.

Where it sits in our coverage

Our consensus target for USD performance against the AUD is 1.075, with a range of 1.04 to 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26) - citi: 1.12 (Mar26)

This view aligns closely with jpmorgan's target, sitting at the upper end of the consensus range, indicating a bullish outlook on the USD against the AUD in light of the anticipated inflation data.

How other firms see it

Aligned firms such as jpmorgan and citi share a similar bullish stance on the USD, anticipating that inflation data will support a stronger dollar. Conversely, bofa holds a more cautious view, projecting a weaker USD performance against the AUD.

Traders should watch the USD/AUD and GBP/USD pairs closely, as their movements will likely reflect the outcomes of the U.S. inflation data and central bank commentary.

What the calendar says

With U.S. core CPI data due on Tuesday, alongside the Fed Chair nomination vote, traders should prepare for potential market volatility. These events are crucial as they may set the tone for monetary policy discussions in the coming months.