Market Outlook for the week of June 9th – 13th

A light week lies ahead, as is typically the case following the NFP release and Monday is also a public holiday in many European countries in observance of Whit Monday.

On Tuesday, Australia will see the release of the Westpac consumer sentiment index, while in the U.K., data on the average earnings index 3m/y, claimant count change, and the unemployment rate will be published.

Wednesday’s highlight will be the release of U.S. inflation data. On Thursday, the U.K. will report its monthly GDP m/m, and in the U.S., we’ll get the PPI m/m along with weekly unemployment claims.

Finally, on Friday, the U.S. will release preliminary figures for the University of Michigan (UoM) consumer sentiment and UoM inflation expectations.

The previous reading of Australia’s Westpac consumer sentiment rose by 2.2%, marking a recovery following an earlier decline linked to tariff concerns. This week’s survey incorporates several key developments, including the RBA’s 25 bps rate cut, a more optimistic inflation outlook, and a weaker-than-expected Q1 national accounts release which suggests continued economic headwinds, according to Westpac analysts.

Additionally, it’s worth noting that financial markets have shown greater stability compared to April, which may help support consumer sentiment.

In the U.K., the consensus for the average earnings index 3m/y is 5.3% versus the prior 5.5%. The claimant count change is expected at 9.5K vs. the previous 5.2K, and the unemployment rate is likely to rise from 4.5% to 4.6%.

Analysts continue to caution that U.K. jobs data remains somewhat unreliable due to ongoing data collection issues. Nevertheless, the overall outlook is not very optimistic, and a cooling labor market appears increasingly likely. Wage growth is also expected to slow in the coming months. In terms of monetary policy, the BoE is not anticipated to deliver another rate cut until November.

In the U.S., the consensus for the core CPI m/m is 0.3% vs. the prior 0.2%. The headline CPI m/m is expected to remain unchanged at 0.2%, while the CPI y/y is projected to rise from 2.3% to 2.5%.

This week’s data is expected to offer a clearer picture of how tariffs are affecting consumer prices. The May release will help determine whether the initial signs of tariff-driven price pressures observed in April were temporary or the start of a broader trend. Particular focus will be on core goods categories such as household items, recreational products, and IT equipment. According to analysts at Wells Fargo, inventory management and customer retention strategies are currently helping to mitigate some of the inflationary impact of tariffs.

Overall, inflation in the U.S. is expected to trend higher in the near term, though the trajectory remains uncertain. In terms of monetary policy, the Fed is not expected to deliver a rate cut at its next meeting.

The consensus for the U.S. core PPI m/m is 0.3% vs. the prior -0.4%, while the headline PPI m/m is expected at 0.2% versus -0.5% prior.

The sharp decline in the previous headline PPI was one of the largest since early 2020, potentially obscuring underlying inflationary pressures related to tariffs. Core goods prices rose 0.4%, twice the average pace from previous 2 years, indicating that producers may be beginning to pass higher input costs through the supply chain, analysts from Wells Fargo noted.

At the same time, a steep 1.6% drop in trade services margins reflects a growing squeeze on profitability, forcing firms to make difficult pricing decisions. Looking ahead, this week’s data is expected to show some improvement, though uncertainty around cost pressures and demand conditions still lingers.

This article was written by Gina Constantin at www.forexlive.com.