The dollar eventually crashed on the NFP in a week that was tense until this big event. More losses for the greenback? Speeches by Janet Yellen and Mario Draghi, Australian and New Zealand’s rate decisions stand out now. These are the market movers for this week. Here is an outlook on the major events coming our way.
US monthly employment report took markets by surprise with a very big disappointment. Non-Farm Payrolls showed a meager job gain of 38,000 reaching a near six year low. Economists expected a job growth of 159,000. While wages were OK and it could be a strike-related one-off, it clearly puts an end to the speculation for a June hike. July is still on the cards. Elsewhere, the ECB seemed very cautious, the yen surged on a “sell the fact” reaction to the sales tax hike and OPEC could not reach any agreement, and not for the first time. Let’s start,
- Janet Yellen speaks: Monday, 16:30. Federal Reserve Chair Janet Yellen will give a talk about the economic outlook and monetary policy in Philadelphia. Yellen may address the recent plunge in the US employment report and give clues about the Fed’s monetary policy intentions in the coming weeks. Market volatility is expected.
- Australian Rate decision: Tuesday, 4:30. The Reserve Bank of Australia cut its official cash rate by 25 basis points in May reaching a historic low of 1.75 %. This was the first change since May 2015, when rates were cut 25 basis points to 2%. The rate cut took the market by surprise. RBA Governor Glenn Stevens said weak inflation was the main reason for this move. Stevens also noted that global economic continued to grow at a slower pace than expected.
- Chinese trade balance: Wednesday, 2:00. The world’s second largest economy has been worrying markets for quite some time with lower economic activity. The bottom line figure of the trade balance report is less important than the changes in imports and exports. Higher levels on both figures is good news for the world and a more “risk on” atmosphere which is favorable for commodity currencies. And a drop in exports and imports is negative.
- US Crude Oil Inventories: Wednesday, 14:30. U.S. crude stocks fell last week by 1.4 million barrels. Economists expected a larger decline of 2.7 million barrels. The bullish report shows decline in domestic production, inventories not only of crude oil but also of gasoline and distillate and stock levels in the Gulf Coast. Crude oil prices edged up by about 60 cents after the release.
- NZ rate decision: Wednesday. 21:00. The Reserve Bank of New Zealand kept interest rates on hold in April, The decision was in line with market forecast. The bank stated that further policy easing may be required to ensure the pace of inflation reaches the middle of the target range. Global growth outlook remained a concern mainly due to weaker economic activity in China and other emerging markets. Domestic economy is reliant on strong inward migration construction activity, tourism and an accommodative policy. Inflation remains weak mostly due to low energy and import prices.
- Mario Draghi speaks: Thursday, 7:00. ECB President Mario Draghi will speak at the Brussels Economic Forum. After keeping rates unchanged in June, Draghi asked for patience saying the balance of economic risks has improved after the recent monetary policy measures taken. Market volatility is expected.
- US Unemployment Claims: Thursday, 12:30. The number of new US jobless claims declined slightly last week to 267,000, down 1000 from the previous week. The report posted the third weekly decline, indicating US employment market remains strong. Economists expected a higher reading of 270,000. The four-week moving average declined by 1,750 last week to 276,750. Next week’s report might be tilted byThe Memorial Day seasonal issues and the annual auto retooling shutdowns in late June/early July.
- Canadian employment data: Friday, 12:30. Canada shed 2,100 jobs in April despite a 35,000 gain in the service sector. A sharp decline occurred in the goods-producing industries offsetting the service’s sector gain. The unemployment rate remained unchanged at 7.1%. Economists expected a modest addition of 200 jobs after the strong growth in March. However, the manufacturing employment lost more than 50,000 jobs since December raising concerns.
- US Prelim UoM Consumer Sentiment: Friday, 14:00. Consumer confidence in the United States edged up in May to the highest level in nearly a year, rising to 95.8. Economists expected a modest rise to 89.9. The outlook index jumped by the most since 2006. Responders projected real incomes would rise by the most in 10 years. Current conditions also improved as many households reported their earnings had grown recently. This could suggest a shift toward spending turning away from savings.
That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.
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