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Major economies are loosening the lockdown shackles, but economic numbers have been slow to recover. First-quarter data has been dismal, and there are fears that a “second wave” of Covid-19 could cause more economic havoc.

The eurozone is struggling, as the manufacturing and services sectors continue to decline. The ECB made no change to key interest rates, but added another EUR 676 billion to the Pandemic Emergency Purchase program. The rescue package now stands at EUR 1.35 trillion. In the U.K., the services sector showed sharp contraction in May, as the Final Services PMI came in at 29.0.

In Australia, the RBA held steady, keeping the cash rate at an ultra-low 0.25 percent. If the Aussie continues to rally, we could see some intervention from the central bank. The economy contracted by 0.3% in Q1, the first decline since 2016.

The Bank of Canada maintained interest rates at 0.25% for a third successive month, as expected. Policymakers noted that financial conditions have started to improve, as the country is slowly recovering from the Covid-19 outbreak. This was the first policy meeting under new BOC Governor Tiff Macklem, who replaces Stephen Poloz. The economy added 289.6 thousand jobs in May, after shedding 1.99 million a month earlier. Analysts had predicted a loss of 500 thousand jobs.

In the U.S., ISM Manufacturing PMI   improved to 43.1, up from 41.1 beforehand. The PMI has indicated contraction for three straight months, as the manufacturing sector has been hit hard by the economic crisis. The services sector also finds itself in contraction territory, as the ISM Non-Manufacturing PMI came in at 45.4 in May within expectations. Nonfarm payrolls shocked with a huge gain of 2.5 million in May, defying the estimate of -7.7 million. In April, the economy shed a staggering 20.5 million jobs. The unemployment rate fell to 13.3%, down from 14.7% beforehand. The forecast stood at 19.4 percent.

  1. Japanese GDP: Sunday, 23:50. The Japanese economy contracted by 1.8% in Q4 of 2020, and a decline of 0.5% is projected for Q1. Two consecutive declines in GDP would signify that the economy is officially in recession.
  2. Eurozone Revised GDP: Tuesday, 9:00. GDP declined by 3.8 percent in Q1, as the eurozone has buckled under the economic meltdown due to Covid-19. The third read is expected to confirm this figure.
  3. US Jolts Job Openings: Tuesday, 14:00. After surprisingly strong job numbers last week, investors will be hoping that the job openings indicator also rebounds. The indicator slowed in April to 6.18 million, down from 6.88 million beforehand.
  4. US Inflation: Wednesday, 12:30. Consumer inflation has declined over the past two months, reflective of the severe economic conditions. In April, the headline figure came in at- 0.8%, while core CPI slipped by -0.4%. Both figures are projected at a flat 0.0% in May.
  5. Fed Rate Decision: Wednesday, 18:00. The U.S. economy is slowly recovering from the paralysis due to Covid-19. Will the Fed send an optimistic message to the markets? If so, the U.S. dollar could get a needed boost.
  6. Australian MI Inflation Expectations: Thursday, 1:00. This Melbourne Inflation is closely watched, as inflation expectations can translate into actual inflation figures. The April gain of 3.4% was well off the 4.6% clip seen a month earlier. Inflation levels have been soft, and this could be reflected in a smaller gain in May compared to April.
  7. US Unemployment Claims: Thursday, 12:30. Jobless claims continue to drop, albeit at a slow rate. Last week’s figure of 1.87 million marked the first time claims have been below the 2-million level since mid-March. The upcoming forecast stands at 1.55 million.
  8. British GDP:  Friday, 6:00. The British economy plunged 5.8% in March, as the economy buckled under the weight of the Covid-19 pandemic. Still, this was better than the forecast of 7.9 percent. Analysts are projecting a staggering -18.0% reading in April. If the economy does hit a double-digit decline, we could see the pound react negatively.
  9. French Final CPI: Friday, 6:45. Inflation in the eurozone’s second-largest economy remains low. CPI has posted only one gain in the past four months and came in at a flat 0.0% in April. No change is expected in the May release.
  10. British Consumer Inflation Expectations: Friday, 8:30. The indicator is closely watched, as inflation expectations can translate into actual inflation figures. The indicator dipped to 3.0% in Q4 of 2019, its lowest level since Q2 of 2018. We now await the Q1 data.

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