Errante’s The Week Ahead: May 19 – May 23, 2025

Highlights of the Week

• RBA Policy Decision: Australia expected to cut rates to 3.85%, weighing on AUD.
• UK CPI & PMI Combo: Key inflation and growth signals to steer GBP volatility.
• Gold & Silver Pullback: Precious metals under pressure after failing key resistance zones.

What Now?

Global Inflation Watch and Central Bank Shifts

As central banks pivot toward a more dovish stance, global markets remain on edge with inflation data taking center stage. The Reserve Bank of Australia’s anticipated rate cut reflects deepening concerns about slowing domestic momentum and weakening external demand from China. Meanwhile, UK inflation is forecast to jump, which may force the Bank of England into a more hawkish tone despite recession risks.

In the US, a resilient labor market and sticky service inflation keep the Fed in a holding pattern, but softening retail demand and mixed PMI trends have begun to test the dollar’s strength. Equities remain buoyant, yet fragile, as rising yields cap upside and commodity-linked currencies respond to metal price corrections. Traders are increasingly sensitive to surprises in CPI and PMI figures, as these will directly influence forward guidance and short-term volatility across forex majors.

US Business Confidence (ISM Manufacturing PMI)

Expect CAD and GBP in particular to react sharply to inflation and retail data, while the USD’s next move will hinge on labor claims and PMI resilience. Commodities like gold and silver remain technically vulnerable, but geopolitical risks and real rate expectations still provide underlying support.

Canada 5-year Inflation Trend

This week’s macroeconomic focus will be dominated by inflation data from the UK and Canada, alongside PMI prints across Europe and the US. The Reserve Bank of Australia is poised to cut rates, responding to sluggish domestic data and a broader global slowdown. Markets are pricing in more accommodative central bank tones as inflation metrics ease across G10 economies, even as services remain sticky.

UK 5-year Inflation Trend

In commodities, gold and silver experienced notable technical rejections at recent highs, pressured by a stronger US dollar and rising bond yields. Traders should keep watch on CAD and GBP pairs as CPI and retail sales figures could reshape expectations around upcoming rate moves.

Bottom Line:

Expect inflation and PMI data to dominate trading decisions this week. The RBA’s tone, UK CPI spike, and Canadian retail activity may all set short-term FX direction for AUD, GBP, and CAD. Meanwhile, metals are vulnerable to further technical selling amid rising real yields.

Upcoming Data and Events (GMT+3):

Monday, May 19

• No high-impact events

Tuesday, May 20

• 7:30am – AUD Cash Rate & RBA Statements: Expected cut to 3.85% may weaken AUD further.
• 3:30pm – CAD CPI m/m: Forecast at 0.50%; strong reading could support CAD amid rate cut speculation.

Wednesday, May 21

• 9:00am – GBP CPI y/y: Inflation expected to climb to 3.30%, putting pressure on BoE.

Thursday, May 22

• 10:15am – EUR French Flash PMIs: Previous Manufacturing at 48.7, Services at 47.3.
• 10:30am – EUR German Flash PMIs: Manufacturing and Services both just below 50.
• 11:30am – GBP Flash PMIs: Manufacturing weak at 45.4; Services at 49.
• 3:30pm – USD Unemployment Claims: Previous at 229K.
• 4:45pm – USD Flash PMIs: Services (50.8) and Manufacturing (50.2) expected near growth threshold.

Friday, May 23

• 9:00am – GBP Retail Sales m/m: Last at 0.40%.
• 3:30pm – CAD Retail Sales m/m: Forecast expected to rebound after -0.40% prior.

Market Insights: Key Charts to Watch

Gold (XAU/USD) – Daily Chart

Technical Outlook:

Gold has pulled back sharply from the $3,434 resistance area, rejecting near the upper Bollinger Band. Price is currently consolidating around $3,177, right below the 100% Fibonacci retracement at $3,201. RSI at 45 indicates weakening momentum, while MACD is still in bearish territory.

Key Levels:

• Resistance: $3,201, $3,290, $3,379
• Support: $3,105, $3,057, $2,968

Bias:

Bearish while below $3,201; downside continuation likely.

Silver (XAG/USD) – Daily Chart

Technical Outlook:

XAG/USD is testing support at the 100% Fibonacci level around $31.65 after repeated rejections from $33.23. RSI at 44 and a weakening MACD suggest potential for deeper pullbacks. Breakdown below $31.65 would open the door to $31.22 and $30.67 extensions.

Key Levels:

• Resistance: $32.86, $33.23
• Support: $31.65, $31.22, $30.67

Bias:

Cautiously bearish below $32.20.

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