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The Week Ahead – Stats, Monetary Policy and Geopolitics to Drive the Majors
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It's a particularly busy week ahead. Economic data, monetary policy, and geopolitics will keep the markets active in the week.
On the Macro
For the Dollar:
It’s a busy week ahead for the Greenback.
May Markit and ISM manufacturing PMI numbers kick off the week, with the ISM number expected to have greater influence.
Following April factory orders and durable goods orders on Tuesday, service sector PMI and ADP nonfarm employment change numbers are due out.
On Wednesday, the ISM service PMI and the ADP numbers will likely be the key driver.
The focus will then shift to May labor market figures due out on Friday. Wage growth and the nonfarm payrolls will be key on the day.
Off less influence in the week, will be 1st quarter nonfarm productivity and unit labor costs numbers due out alongside the weekly jobless claims and trade data.
Outside of the stats, sentiment towards trade and FED monetary policy will influence through the week.
On the policy front, FED Chair Powell is due to deliver a speech on Tuesday.
The Dollar Spot Index ended the week up 0.14% to $97.750.
For the EUR:
It’s also a busy week ahead.
May manufacturing PMI numbers are due out of Spain, Italy, France, Germany, and the Eurozone on Monday.
We can expect the market focus to be on Italy’s PMI and Germany’s finalized number. The EUR will likely come under pressure if the figures are in line with or worse than forecast.
The Eurozone’s Prelim May inflation figures will influence on Tuesday ahead of service sector PMI numbers due out on Wednesday.
Alongside the service PMI numbers, April retail sales are also due out of the Eurozone that will also influence.
On Thursday, German factory orders and 3rd estimate Eurozone GDP numbers could set the tone for the ECB later in the day.
At the end of the week, German trade and industrial production figures will round off a busy week for the EUR.
Outside of the stats, the ECB will deliver its June monetary policy. If the last financial stability review was anything to go by, the EUR will likely take a hit through the ECB press conference.
The EUR/USD ended the week down 0.3% to $1.1169.
For the Pound:
It’s a relatively busy week ahead. Key stats include manufacturing, construction and, service sector PMI numbers.
Monday’s manufacturing and Wednesday’s service sector PMI numbers will have the greatest influence from the calendar.
On the monetary policy front, BoE Governor Carney could provide some guidance on Thursday to influence the Pound.
The key driver through the week, however, will continue to be sentiment towards Brexit and chatter from the UK Parliament.
The GBP/USD ended the week down 0.67% to $1.2629.
For the Loonie:
It’s a relatively busy week ahead.
1st quarter labor productivity numbers will provide direction on Wednesday, ahead of April trade data and the Ivey PMI on Thursday.
Employment change and the unemployment rate will likely have a more material impact on Friday, however.
Outside the numbers, crude oil prices and market sentiment towards U.S foreign policy will also influence.
Following the latest threat to Mexico, the USMCA may not be as reliable as had been initially thought…
The Loonie ended the week down 0.59% to C$1.3516 against the U.S Dollar.
Out of Asia
For the Aussie Dollar:
It’s a particularly busy week ahead.
Key drivers through the week include 1st quarter gross company profit figures due out on Monday and retail sales figures on Tuesday.
1st quarter GDP numbers on Wednesday will also influence ahead of April trade data on Thursday.
Of less impact will be home loan figures due out on Friday.
From elsewhere, China’s manufacturing PMI, due out on Monday, will also influence.
While the stats will provide direction, the focus in the early part of the week will be on the RBA monetary policy decision on Tuesday.
The Aussie Dollar ended the week up 0.16% to $0.6938.
For the Japanese Yen:
1st quarter capital spending and May manufacturing PMI figures are due out on Monday.
With the markets having to wait until Friday for May household spending figures, market risk sentiment will continue to be the key driver in the week.
The Japanese Yen ended the week up 0.93% to ¥108.29 against the U.S Dollar.
For the Kiwi Dollar:
There are no material stats due out in the week.
A lack of stats will leave the Kiwi Dollar in the hands of market risk appetite and China’s private sector PMIs.
The Kiwi Dollar ended the week down 0.34% to $0.6531.
Out of China:
Private sector PMI numbers due out on Monday and Wednesday will influence market risk sentiment.
We expect that Monday’s manufacturing PMI will have the greatest Impact.
Outside of the numbers, China’s next moves in the extended trade war with the U.S will, however, be the key driver.
Geo-Politics
Trade Wars: Further action is expected in the week. Mexico will respond to Trump’s latest threat and China may look to find common ground with the U.S.
UK Politics: There’ll be plenty of attention placed on the UK Parliament. Front runners to replace Theresa May will also keep Brexit a hot topic in the week.
The Rest
On the Monetary Policy Front:
For the Aussie Dollar, the RBA will deliver its June policy decision on Tuesday. The Aussie Dollar could be in for a tumble if the RBA talks of the need for a rate cut.
For the EUR, the ECB will deliver its June policy decision on Thursday. Doom and gloom will likely see Draghi raise further red flags over the Eurozone economy. The EUR’s unlikely to find too much support during the press conference…
About the Author
Bob Masonauthor
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.
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