Weekly Outlook: May 30 - April 03; U.S. NFP Report & ECB Policy Meeting in Focus

We head to the first week of the month, thus the U.S. jobs report will be released and the Fed will keep a close eye on it, as it takes a data-driven approach to the timing of its next interest rate hike, especially following Friday’s Yellen’s statement that a rate hike is probably appropriate in the “coming months”. The ECB will have its interest rate decision that may impact the euro, even though no changes are expected to the current monetary policy.

We start the week with a public holiday in United States and United Kingdom. Early in the European morning, various indicators for sentiment in Euro area will be released. The services sentiment is expected to have slowed down to 11.0 in May from 11.5 before, while the consumer confidence is expected to have remained unchanged at -7. The industrial confidence is expected to show a small improvement to -3.6 versus -3.7 the month before, as well as the economic sentiment to 104.5 from 103.9 the previous month.

The German flash inflation rate for May is coming out and analysts forecasted consumer prices to have risen by 0.3% compared to the month before that declined by 0.4%. Later in the day, the Japanese unemployment rate and the overall household spending, as well as the flash industrial production all for April, will be released.

On [B]Tuesday[/B], the German retail sales for April will be out and a while later the unemployment rate for May. The Eurozone as a whole is expected to remain in deflation for May at -0.1% from -0.2% before while the unemployment rate is predicted to remain at 10.2%.

In U.S., personal income is expected to remain unchanged in April while the personal spending is forecasted to have advanced by 0.4% in May from 0.1% before. The personal consumption expenditures for April will be eyed as they are a main engine for the economic growth. The consumer confidence in May is predicted to have risen to 96.0 from 94.2 before. Later in the afternoon, the Canadian annualized GDP for the first quarter will be released and overnight the Australian GDP for the first quarter as well is forecasted to show a small slowdown compared to the previous quarter.

[B]Wednesday [/B]is a Markit day. The Markit manufacturing PMIs for Eurozone, Germany, UK, France and U.S. will be released. In Germany and Eurozone as a whole, the expansion of the manufacturing sector is expected to remain stable at 52.4 and 51.5 respectively in May, as the month before. In UK, the sector will expand more by 49.8 versus 49.2 before.

In U.S., the ADP survey showed shows the pace of hiring in the private sector is forecasted to jump at 180K versus 156K in April. On Friday’s speech, Fed Chair Janet Yellen said that a rate hike is probably appropriate in the “coming months” and as we know that Fed’s moves are heavily data dependent, the employment report will be released on Friday, as well as the ADP survey, which is a small forecast for the non-farm payrolls report, will be closely watched.

Meanwhile, the Institute for Supply Management (ISM) is expected to show that the national factory activity index fell to 50.6 in May from 50.8 in April. The construction spending is expected to have increased by 0.5% in April from an increase of 0.3% the month before. In the evening, the U.S. Federal Reserve will publish its latest Beige Book, a summary of conditions across the 12 Federal Districts. In New Zealand, the Fonterra dairy auction will take place.

On [B]Thursday[/B], the Organization of the Petroleum Exporting Countries (OPEC) will have a meeting which may impact significantly oil’s price. The UK construction PMI is expected to show a small decline to 51.6 in May versus 52.0 the previous month. Figures above 50.0 indicate expansion.

The European Central Bank will have its interest rate decision, no changes are expected to the historically low interest rates, the main interest rate at zero and deposit rate at -0.4%, however, the monetary policy statement and the press conference will be eyed. The U.S. weekly jobless claims will be released as usual and the FOMC Member Powell will give a speech.

Going to [B]Friday[/B], the Markit services PMI for numerous countries will be released. No changes are expected to Euro area and Germany while in UK the services sector is predicted to have advanced to 52.5 from 52.3 before. Eurozone’s retail sales are expected to rise 1.9% in April yoy from 2.1% before, and 0.3% mom versus a drop of 0.5% in March.

Later in the day, attention shift to U.S. where the employment report will be closely eyed. No changes are expected to the low 5% unemployment rate. The U.S. economy is predicted that added 170k jobs in both the public and private sectors in May versus 160k in April. The average hourly earnings are expected to have risen 0.2%, lower than last month’s increase of 0.3%. The Federal Reserve will keep a close eye on Friday’s job report, as it takes a data-driven approach to the timing of its next interest rate hike.

The U.S. Markit services PMI for May will be released as well as the ISM Non-Manufacturing PMI that is forecasted to remain at 55.7. The factory orders are expected to rise by 0.6% versus an increase of 1.1% before.