Weekly Outlook: 2017, May 28 - June 04

The US dollar managed to recover in the last full week of May. As the page turns into June, we have a buildup to the Non-Farm Payrolls, consumer confidence, and the Fed’s favorite inflation figure. Here are the highlights for the upcoming week.

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1. US Core PCE Price Index: Tuesday, 12:30. A monthly rise of 0.1% is expected.
2. CB Consumer Confidence: Tuesday, 14:00. A small drop to 120.1 is on the cards.
3. Euro-zone inflation figures: Wednesday, 9:00.
4. Canadian GDP: Wednesday, 12:30. We now get the monthly figure for March which carries expectations for 0.3%.
5. Chinese Caixin Manufacturing PMI: Thursday, 1:45. A score of 50.2 is expected now.
6. US ADP Non-Farm Payrolls: Thursday, 12:15.
7. US jobless claims: Thursday, 12:30. After standing at 234K, a tick up to 239K is expected.
8. US ISM Manufacturing PMI; Thursday, 14:00. A similar score of 54.7 is on the cards.
9. Crude Oil inventories: Thursday, 15:00.
10. US Non-Farm Payrolls: Friday, 12:30. Expectations stand at 186K, an unemployment rate of 4.4% once again and a rise of 0.2% in hourly wages after 0.3% last month.

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EUR/USD had a positive week in general, rising as prospects continue looking better in the euro-zone in comparison to the US. The upcoming week features preliminary inflation figures and PMIs.

Attachment 27192

1. Monetary data: Monday, 8:00. A small deceleration to 5.2% is on the cards.
2. Mario Draghi talks: Monday, 13:00. The President of the ECB will testify in front of the European Parliament and could provide some insights about the next moves of his institution.
3. German Import Prices: Tuesday, 6:00. A bounce worth 0.2% is predicted now.
4. French Consumer Spending: Tuesday, 6:45. A rise of 0.8% is predicted.
5. French GDP: Tuesday, 6:45.
6. Spanish Flash CPI: Tuesday, 7:00.
7. German CPI: Tuesday, with the German states publishing their data during the morning. The all-German preliminary CPI is released at 12:00.
8. German Retail Sales: Wednesday, 6:00. A quicker rise of 0.4% is now expected.
9. French CPI: Wednesday, 6:45.
10. German Unemployment Change: Wednesday, 7:55. A fall of 15K was seen in March and now a similar slide of 14K is on the cards.
11. CPI (preliminary): Wednesday, 9:00.
12. Unemployment Rate: Wednesday, 9:00. Another small slide to 9.4% is on the cards now.
13. Manufacturing PMIs: Thursday morning: 7:15 for Spain, 7:45 for Italy, 7:50 for the final French figure, 7:55 for the final German number and finally the final all-European update at 8:00.
14. Spanish Unemployment Change: Friday, 7:00. A drop of 129.3K was seen in April and another big slide of 110.2K is on the cards for May.
15. PPI: Friday, 9:00. A fall of 0.3% was seen last month and a bounce of 0.2% is predicted now.

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GBP/USD dropped sharply last week, dropping 230 points. The pair closed at 1.2781, its lowest weekly close in four weeks. This week’s key events are Manufacturing and Construction PMIs.

Attachment 27193

1. BRC Shop Price Index: Tuesday, 23:01. This consumer inflation report continues to post declines, but the rate of decline has been lower over the past three readings. In April, the index came in at -0.5%. Will we see a reading in positive territory in May?
2. GfK Consumer Confidence: Tuesday, 23:01. The British consumer remains pessimistic about the economy according to this indicator, which continues to record readings below zero. The estimate for May stands at -8 points.
3. Net Lending to Individuals: Wednesday, 8:30. Borrowing levels are closely watched, as they are linked to consumer spending levels. The indicator dipped to GBP 4.7 billion in March, but this beat the estimate of GBP 4.5 billion. The downward trend is expected to continue, with an estimate of GBP 4.5 billion.
4. Nationwide HPI: Thursday, 6:00. This housing price index is a useful gauge of the level of activity in the housing sector. The indicator has recorded two consecutive declines, missing expectations on both occasions. The markets are expecting better news in May, with an estimate of 0.2%.
5. Manufacturing PMI: Thursday, 8:30. The index continues to point to expansion in the manufacturing sector, and the March reading of 57.3 beat expectations. The forecast for April stands at 56.5 points.
6. 10-y Bond Auction: Thursday, Tentative. The yield on 10-year bonds dropped to 1.13%, its lowest since October 2016. Will we see a higher yield in the May release?
7. Construction PMI: Friday, 8:30. The PMI has been fairly steady, pointing to modest expansion in the construction sector. The March reading of 53.1 beat the estimate of 52.1 points. The markets are expecting a slight dip in April, with an estimate of 52.7 points.

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AUD/USD was unchanged last week, closing at 0.7439. This week’s key events are Private Capital Expenditures and Retail Sales.

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1. Building Approvals: Tuesday, 1:30. The markets are expecting a strong rebound in the April report, with a forecast of +3.2%.
2. Private Sector Credit: Wednesday, 1:30. The estimate for the upcoming release is 0.4%.
3. AIG Manufacturing Index: Wednesday, 23:30.
4. Private Capital Expenditure: Thursday, 1:30. The indicator is expected to improve in Q1, with an estimate of 0.3%.
5. Retail Sales: Thursday, 1:30. The markets are expecting better news in the March report, with a gain of 0.3%.
6. Commodity Sales: Thursday, 6:30.
7. HIA New Home Sales: Friday, 1:00. This indicator provides a snapshot of the strength of the housing market. The indicator has not posted a gain above 0.2% this year.

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The Canadian posted gains for a second straight week, as USD/CAD lost 80 points. The pair closed the week at 1.3440. This week’s key event is GDP.

Attachment 27194

1. Current Account: Tuesday, 12:30. The deficit for Q1 is expected to rise to C$11.4 billion.
2. RMPI: Tuesday, 12:30. This index measures inflation in the manufacturing sector. The indicator continues to weaken and came in at -1.6% in March, a sharper drop than expected.
3. GDP: Wednesday, 12:30. The March estimate stands at 0.3%.
4. Manufacturing PMI: Thursday, 13:30.
5. Trade Balance: Friday, 12:30. Little change is predicted for the April release, with a forecast of C$0.0 billion.
6. Labor Productivity: Friday, 12:30. The estimate for Q1 stands at 0.2%.

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