US-Sino trade wars continued dominating the scene and also Theresa May’s resignation was in the limelight. Will the mood improve? After markets digest the results of the European elections, US GDP, Canada’s rate decision and other events will move markets. Here the highlights for the next week.
Tensions between the US and China focused on technology rather than trade. While the US provided a temporary reprieve for Huawei, it is reportedly considering a broader ban on surveillance companies. China has hinted that its vast reserves of rare earth may also come into play. While the USD initially advanced, it later suffered from the fall in US yields. In the UK, PM Theresa May announced she would step down as party leader on June 7th, after failing to garner support for another Brexit deal. US data mostly disappointed, with an especially worrying fall in durable goods orders. However, the Fed’s meeting minutes showed no imminent rate cut on the cards. Things are not much better in Germany, where fresh surveys have shown an ongoing downturn.
- US CB Consumer Confidence: Tuesday, 14:00. Conference Board’s consumer confidence measure has been mostly upbeat in recent months. After standing at 129.2 in April, May’s number is projected to tick up to 130.1 points. Positive sentiment implies robust retail sales.
- Canadian rate decision: Wednesday, 14:00. The Bank of Canada has already removed its hawkish bias and does not intend to raise interest rates. However, the jobs market continues booming and it may eventually push inflation higher. The BOC is set to keep its interest rate unchanged at 1.75% but the tone of the statement may rock the Canadian dollar. Governor Stephen Poloz and his team will likely remain cautious despite the employment data.
- US GDP (second release): Thursday, 12:30. According to the first release of GDP, the US economy grew by 3.2%, better than expected, but coming on top of weak inflation. A minor downgrade to 3.1% is projected now, and the deflator will be closely watched once again. Among the components, personal consumption and exports are considered positive factors, while inventories and government spending are less welcome.
- Canadian GDP: Friday, 12:30. Canada publishes its GDP data on a monthly basis. Back in February, the economy shrank by 0.1%, worse than forecasts. We will now receive the data for March, which also concludes the first quarter. Weak growth is on the cards.
- US Core PCE: Friday, 12:30. This is the Fed’s preferred measure of inflation. It dropped to 1.6% y/y in March, a disappointing outcome. However, Fed Chair Jerome Powell said that Q1 inflation is “transitory”. A minimal acceleration to 1.7% is likely now and will help vindicate the central banker’s words.
*All times are GMT
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