Private consumption accounts for circa 60% of the Japanese economy. The weaker Yen pushes import costs higher, impacting prices for goods and household spending. Continued weakness in household spending could leave the Bank of Japan in a holding pattern and the USD/JPY in the hands of the Fed.

On Friday (May 31), economic indicators from Japan will give investors a snapshot of the macroeconomic environment in early Q2 2024. Inflation, unemployment, retail sales, and industrial production numbers will warrant investor attention. Softer inflation numbers and a pullback in retail could close the door further on a 2024 BoJ rate hike.

US Economic Calendar: Consumer Confidence and Fed Speeches

Later in the Tuesday session, US consumer confidence will be in focus. A pullback in consumer confidence could signal a weakening consumption environment. Downward trends in consumer spending could dampen demand-driven inflation and allow the Fed to cut interest rates.

Economists forecast the CB Consumer Confidence Index to fall from 97.0 to 95.9. An unexpected slide below 90.0 could spook investors. A sharp fall in consumer confidence could reignite fears of a hard landing.

Other stats include housing and manufacturing sector data. However, the focus will likely be on consumer confidence before the all-important US Personal Income and Outlays Report (May 31).

Furthermore, FOMC member speeches also need consideration. FOMC members Loretta Mester, Neel Kashkari, and Lisa Cook are on the calendar to speak on Tuesday. Reaction to the recent service sector PMI and labor market data could move the dial.