The key report for the markets on Monday will be the volume of industrial production in China. Growth is expected at 9.8% y/y, a positive surprise will likely boost demand for risk as it will indicate that manufacturing sector in China successfully absorbs increasing inflation of production prices, which means that expansion of the global economy will likely continue.

On Tuesday, the markets' attention will be focused on the RBA meeting report. Investors will look for hints of policy tightening and will most likely find them given that inflationary pressures in countries with commodity currencies are now especially strong due to boom in commodity markets, increasing chances for a hawkish response from the Central Bank. For example, the Bank of Canada has already made the corresponding hawkish signal, the turn is for the RBA. The target for AUDUSD next week is the high of May 10 at 0.7880.

Inflation data for the UK, EU and Canada is due on next Wednesday. An upbeat inflation surprise will likely fuel outflows from local debt adding pressure on the Central Bank as well. Also on this day, the minutes of the last meeting of the FOMC will appear, which most likely have negative impact on US currency due to overly easing bias on the Fed what should be reflected in the report.

On Thursday, the PBOC will announce its base lending rate decision and the US will release unemployment claims data. The market needs more confirmation that the April NFP were caused by distortions and was not a turning point in the trend, so financial markets are now watching especially closely the data on the US labor market.

On Friday, data on activity in Germany and the UK will provide a better understanding of how economies are recovering from lockdowns. A moderately positive effect is expected from the data release on the European currency and GBP.

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