FXStreet (Bali) – David Fritz, Global Markets Strategist at Nomura, breaks down the key events for the following week, noting that the most watched event will the change in US non-farm payrolls for the month of May, released on Friday, with the RBA, ECB and BOE monetary policy meetings also due.
Key Quotes
“In the US, there will be several indications of economic momentum. The most watched event will the change in non-farm payrolls for the month of May, released on Friday. Here our US economics team expects an increase of 190K, compared to market expectations of 224K and also representing a decrease from the 223K increase in April. This would keep the unemployment rate at 5.4%, although hourly earnings are expected to show an increase to 0.3% m-o-m from 0.1% m-o-m. The ADP employment figure on Wednesday not surprisingly is also expected to show a below-consensus increase of 185K (compared with 198K for the market).”
“There will also be a slew of US PMI and ISM numbers, with manufacturing on Monday and services and composites on Wednesday, as well as factory orders and vehicle sales on Tuesday. All will indicate how the economic momentum fared in May. The Fed Beige book should provide more color on the economy as well, with key points to look for being any rebound from the inclement weather and dollar headwinds, as well as any pickup in wages. And as we noted in Recalibrating Global FX Forecasts, an unusual data point has been the rising savings rate, which has kept the recovery from full potential. The income and spending data on Monday could provide more clarity on this front.”
“The Eurozone and China will also provide PMI data next week. The Chinese data overall has been picking up, and the new data points could provide further clarity. Our economists maintain their forecast for real GDP growth to slow to 6.6% y-o-y from 7.0% in Q1. The final estimates Eurozone PMIs are expected to be in line with market consensus, as is Q1 GDP released on Friday. The unemployment rate is expected by the market to fall slightly to 11.2% from 11.3%. These data points will provide more recent signals on economic momentum, which had begun to slow. Eurozone inflation, released on Tuesday, is expected by Nomura economists to come in above expectations at 0.8% y-o-y for core (vs. 0.7%) and 0.4% for headline (vs.0.2%). See Economic and Political Events Calendar in Europe, 15 May 2015 for other upcoming releases. There will be a few central bank rates decisions next week, namely the RBA on Tuesday, ECB on Wednesday, and BoE on Thursday. All three are expected to remain on hold.”
“For the ECB meeting, the Eurosystem staff projections will be the main focus, where the main change is expected to be an upward revision of inflation expectations (see The Economy Next Week, 29 May 2015). The BoE is expected to be uneventful since the inflation report was released recently with little new data since (see UK Wrap, 29 May 2015). The RBA, while expected to hold rates steady, may provide some interesting commentary. In particular, they are expected to show an easing bias, although caveated with need to see how circumstances develop.”
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