Weekly Outlook: 2016, May 29 - June 05

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The US dollar had a positive week despite a lack of really convincing data. GDP from Canada and Australia, a buildup to the Non-Farm Payrolls, OPEC Meetings and the ECB decision stand out in a very busy week.

1. Canadian GDP data: Tuesday, 12:30. March GDP is expected to remain flat.
2. US CB Consumer Confidence: Tuesday, 14:00. Consumer confidence is expected to reach 96.1 in May.
3. Australian GDP data: Wednesday, 1:30. Economists expect GDP to grow 0.6% in the first quarter.
4. Chinese Caixin Manufacturing PMI: Wednesday, 1:45. A minor drop is expected for May: from 49.4 to 49.3 points.
5. US ISM Manufacturing PMI: Wednesday, 14:00. The manufacturing sector is expected to remain in the grow zone with 50.6.
6. OPEC Meetings: Thursday. Mohammed bin Saleh al-Sada president of OPEC said a minimum price of $65 a barrel is “badly needed at the moment.”
7. ECB Rate decision: Thursday, 11:45.
8. US ADP Non-Farm Payrolls: Thursday, 12:15. ADP non-farm payrolls is expected to register a job gain of 179,000.
9. US Unemployment Claims: Thursday 12:30. The number of new jobless claims is expected to reach 271,000 this week.
10. US Crude Oil Inventories: Thursday, 15:00.
11. US Non-Farm Payrolls: Friday, 12:30. Non-Farm Payrolls is expected to show a job addition of 160,000 while the unemployment rate forecast is 4.9%.
12. US ISM Non-Manufacturing PMI: Friday, 14:00. U.S. service sector is expected to expand to 55.4 this time.

the source

Last week Janet Yellen’s speech at Harvard was the focal point. Yellen said that rate increases were on the horizon send the US dollar higher while gold traded at its lowest point this year. Economic data over the coming holiday-shortened week will provide investors with further clues on the staying power of the US economic expansion and clues regarding the efficacy, or not, of the most recent monetary easing undertaken in China and in the euro area.

To take note of, in a research note sent to clients on 26 May strategists at Bank of America-Merrill Lynch labelled the coming month "event risk June", what with both the Bank of Japan and US Federal Reserve set to decide on rates almost side-by-side mid-month - with the Brexit referendum looming ever larger on the horizon.

Against that backdrop, and following Monday´s holidays in the UK and the US, traders will be greeted the next day by April figures on money supply growth and credit dynamics in the Eurozone.
Data out that same day, on industrial production and unemployment in Japan, may also help to inform the debate regarding the need for further stimulus measures in the world´s third largest economy. Indeed, multiple media reports indicate that on or about the same date prime minister Shinzo Abe may announce that consumption tax hikes due to come into effect in April 2017 might be delayed.
ADP´s monthly payrolls report, which is typically released on the Wednesday of each week, will be pushed out to Thursday due to the Memorial Day holiday. Ahead of the nonfarm payroll report due on Friday.
Manufacturing sector purchasing managers´ indices from all the major geographies, on Wednesday, and especially from China, will also be closely monitored by markets.

Finally, OPEC is set to meet on Thursday.

The ECB meeting is not expected to be one of the blockbuster ones, with little change on policy expected, while the run of PMIs will be of interest for various currency pairs.
The recent breakout in equities suggests that the post-February rally may not be done just yet, although much hinges on the outlook for Fed policy. Recent strength in the dollar has begun to shift, and if this continues equities, plus oil and other commodities, may find it easier to stage a rally.

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