The markets witnessed a great deal of action following the Italian crisis, abnormal action related to the NFP, and looming trade wars. Italy grabbed a lot of attention after the Euroskeptic finance minister was rejected by the President. This move triggered concerns as to whether new elections would turn into a referendum on euro-zone membership and sent the markets down and currencies away from the pound and euro into the safe haven of the yen. The positive twist came in when a compromise was found for the Italian crisis. However, the populist government in Italy is still likely to cause some more headaches.
The Non-Farm Payrolls data came in above analysts’ expectations, but President Trump hinted at the encouraging report 69 minutes ahead of its release. This triggered the “buy-the-rumor-reaction” and led to a muted reaction later on when the data was actually released. In spite of all these the Fed is expected to raise the interest rates later this month.
On the other hand, the political changes that took place in Spain had a very little impact on the markets. Meanwhile, the Trump administration implemented trade tariffs on Mexico, Canada, and the EU. This sparked not only anger but also retaliatory tariffs and weighed down the markets. The effect is expected to continue to loom large over the markets in the coming weeks as well.
On the Korean front, the progress in negotiations between the U.S. and North Korea provided some relief. Further, the euro-zone finally reported some positive data as regards an increase in inflation rate. The Canadian dollar benefitted from the hawkish statement made by its central bank, but the US tariffs and a weak GDP put some pressure on its upward movement.
Now, here is an outlook on the key data scheduled for release during the upcoming week:
#1: Australia Retail Sales (06/04/2018 Monday 01:30 GMT)
In Australia, retail trade remained unchanged on a month-on-month basis in March after the 0.6 percent increase in the previous month. Analysts had expected a 0.3 percent increase in retail sales in the month of March. Only the food retailing sector reported higher sales in March. Sales dropped at cafes, restaurants and takeaway food; other retailing outlets; household goods outlets; department stores; and clothing, footwear, and personal accessories shops. Forecast for April 2018: 0.3 percent increase
#2: U.K. Construction PMI (06/04/2018 Monday 08:30 GMT)
In the U.K., the IHS Markit/CIPS Construction PMI jumped to the five-month high level of 52.5 in the month of April from 47.0 in the prior month. The reading for the month came in way above analysts’ expectation of the 50.5 level. The latest figure indicated a moderate recovery in output in the construction sector after the weather-related disruptions impacted the sector in March. House building sector recorded the strongest growth rate that has been reported in the last two-and-a-half years. Civil engineering work and commercial building construction rose marginally after recording significant declines in the prior month. New orders and employment rose for the 21st month in a row. Further, business confidence came in at the strongest level since May last year. Meanwhile, input price inflation remained unchanged from the 20-month low hit in March. Forecast for May 2018: 52.0
#3: Australia RBA Rate Statement (06/05/2018 Tuesday 04:30 GMT)
The Reserve Bank of Australia releases the Rate Statement on the first Tuesday of every month except January. The central bank uses it as a tool to communicate with the investors the details about monetary policy decisions. In addition to containing the outcome of the members’ decision on interest rates, it provides a commentary on the economic conditions that impacted their decision. More importantly, it provides an economic outlook and clues on future decisions.
#4: Australia Cash Rate (06/05/2018 Tuesday 04:30 GMT)
In the meeting held in May, the Reserve Bank of Australia decided to leave the cash rate steady at the record low level of 1.50 percent as was widely expected by the analysts. Policymakers said that the economy is expected to grow more than 3.0 percent in 2018 and 2019, respectively, because of stronger exports and positive business conditions. However, household consumption continued to remain uncertain. Forecast for June 2018: 1.50 percent
#5: U.K. Services PMI (06/05/2018 Tuesday 08:30 GMT)
In the U.K., the IHS Markit/CIPS Services PMI increased to 52.8 in April from the 20-month low of 51.7 hit in March. However, the reading for the month came in below analysts’ estimate of 53.5. Even now the latest reading signals only a modest rebound in the growth of business activity following the disruptions caused by snow in March. The rate of expansion is the second-weakest ever since September 2016. New business growth remained at the second-lowest level since August 2016. The job creation rate moderated to the weakest level since March 2017. Input cost inflation retreated since March and continued to remain softer than the levels in 2017, while the average prices charged increased the least in as many as nine months. The business optimism for the year ahead, however, reached the highest level ever since January. Forecast for May 2018: 52.9
#6: European Central Bank President Mario Draghi Speaks (06/05/2018 Tuesday 13:00 GMT)
Mario Draghi, President of the European Central Bank, is scheduled to participate in the panel discussion – “Two Presidents’ Talk” – along with Jean-Claude Trichet, former ECB President, at the 20th-anniversary event of the ECB in Frankfurt. Markets often remain volatile during his speeches. This is because traders look for interest rate clues.
#7: U.S. ISM Non-Manufacturing PMI (06/05/2018 Tuesday 14:00 GMT)
In the U.S., the ISM Non-Manufacturing PMI fell to the 56.8 level in April from the 58.8 level in March. The reading for the month came in well below analysts’ expectation of the 58.1 level. As such, the reading indicated the lowest expansion rate in the non-manufacturing sector in as many as four months because of a slowdown in employment, production, uncertainty related to trade tariffs, and the cost of goods. However, the firms remained positive as regards the economic and business conditions. Forecast for May 2018: 57.9
#8: Australia GDP (06/06/2018 Wednesday 01:30 GMT)
Australia’s economy expanded 0.4 percent in the final quarter of last year after the growth rate for the previous quarter was revised upward to 0.7 percent. Analysts had expected the economy to grow by 0.6 percent. This is the weakest growth since the contraction in the third quarter of 2016. Positive contributions came in mainly from the final consumption expenditure. Net trade and non-dwelling construction contributed negatively. For the full year, the economy registered 2.4 percent growth which is slower compared to the upwardly revised expansion of 2.9 percent for the prior period and slightly below analysts’ expectation of 2.5 percent expansion. Forecast for the first quarter of 2018: 0.8 percent expansion
#9: Canada Balance of Trade (06/06/2018 Wednesday 12:30 GMT)
Canada’s trade deficit increased to a record C$4.1 billion in March after the deficit for the previous period was revised upward to C$2.9 billion. Analysts had expected a trade deficit of C$2.24 billion. While imports advanced 6.0 percent to the all-time high level of C$51.7 billion, driven by higher motor vehicles and parts and consumer goods purchases, exports increased at a softer rate 3.7 percent to C$47.6 billion, driven by higher aircraft and transportation equipment; farm, fishing, and intermediate food products; and energy products sales.
#10: U.S. Crude Oil Stocks Change (06/06/2018 Wednesday 14:30 GMT)
In the U.S., crude oil stocks dropped by 3.62 million barrels during the week that ended on May 25, following the 5.778 million barrels rise in the prior period. Analysts had expected crude oil stocks to decline by 0.4 million barrels. Meanwhile, gasoline stocks increased 0.534 million barrels after registering an increase of 1.883 million barrels in the prior week. Analysts had expected gasoline stocks to fall by 1.368 million barrels.
#11: Australia Balance of Trade (06/07/2018 Thursday 01:30 GMT)
Australia’s trade surplus increased by 13 percent to A$1.53 billion in March after the figure for the prior period was revised upward to A$1.35 billion. The reading for the month came in far above analysts’ expectation for a surplus A$0.7 billion. This is the biggest trade surplus ever since May 2017. For the first quarter of 2018, Australia’s trade surplus was A$ 4.04 billion, which is down sharply from A$7.09 billion for the same period last year. Forecast for April 2018: a surplus of A$1.03 billion
#12: Canada BoC Governor Stephen Poloz Speaks (06/07/2018 Thursday 15:15 GMT)
Stephen Poloz, Governor of the Bank of Canada, is scheduled to hold a press conference in Ottawa on the Financial System Review. Markets often remain volatile during his speeches. This is because traders look for interest rate clues.
#13: Canada Employment Change (06/08/2018 Friday 12:30 GMT)
Canada lost 1,100 jobs in April after adding as many as 32,300 jobs in the month of March. Analysts had expected that the economy would add 17,400 jobs. Part-time work declined by 30,000, while full-time jobs increased by 28,800. The number of employees in the public and private sectors and the number of self-employed people remained almost unchanged in April.
#14: Canada Unemployment Rate (06/08/2018 Friday 12:30 GMT)
In Canada, the unemployment rate remained unchanged at the 5.8 percent level in the month of April from the prior month. The reading for April was in line with analysts’ expectations. The unemployment rate came in at its lowest level ever since 1976 for the third month in a row. Employment dropped by 1,100 mainly because of job losses in retail and wholesale trade, and construction sectors.