Economic Outlook: US Fed or China PMI – Who’s Stealing the Spotlight this week?

Economic Outlook: US Fed or China PMI - Who's Stealing the Spotlight this week?

The Economic Outlook for the week is in and it looks quite promising.

The latest US Fed policy meetings and employment report are the key data and events this week. At the same time, the eurozone and China release closely watched economic data. Here’s what you need to know to start your week.

Risk events next week include both scheduled and geopolitical events to be aware of. On the geopolitical front, despite the Israel-Iran tensions subsiding, news of Russia striking power facilities on Ukraine could slow the risk on sentiment.

Economic Outlook: The key data and events for this week

Monday – German CPI

German and Franch consumer inflation numbers are set to release in very start of the week. German Prelim CPI m/m expect to increase by 0.6% from previous 0.4%. That could have a negative impact on the euro

Further, Spanish Flash CPI y/y is foreseen at 3.4% from the previous 3.2%.

 Both numbers will have moderately negative for the Euro.

Tuesday- China Manufacturing PMI

China’s April manufacturing data will attract attention on Tuesday. April data showed that the long-awaited recovery in the world’s second-largest economy is gathering momentum after stronger-than-expected data last month.

Manufacturing PMI is forecast to fall to 50.3 from 50.80, while non-manufacturing PMI could fall to 52.2. from 53.00. That could have a inverse impact on the metals prices.

Alternatively, Upbeat data would be a relief to policymakers who have been trying to shore up growth and bolster investor sentiment

In addition, another important piece of information could be the data on inflation and economic growth of the Eurozone, which are likely to strengthen the market’s bet on the interest rate of the European Central Bank in June. Core CPI Flash Estimate y/y is expected to cool to 2.6% from 2.9% previously. While the CPI flash estimate will not remain at 2.4%

Inflation has slowed rapidly over the past year and the ECB announced its intention to cut interest rates in June, but the longer-term outlook continues to be clouded by rising energy costs, persistently high services inflation and ongoing geopolitical tensions that threaten to disrupt trade.

UK Flash Manufacturing PMI is expected to remain unchanged, while Flash Services PMI may moderate by 53 from previous 53.1. That could have a neutral impact on the pound.

Further, US CB Consumer Confidence data to be release which would have a neutral impact on the dollar. As data is foreseen at 104 with minor change against the previous 104.7.

Wednesday – US Fed Decision

The Economic Outlook for the Wednesday might just be the most interesting one yet. Will ADP private sector employment data be released ahead of Fed policy, along with the JOLTS job vacancies report and other survey data to help bolster expectations.

ADP nonfarm payrolls change is forecast to decrease by 179,000 from 184,000, while JOLTS jobs are expected. down by 8.68 million from an earlier 8.76 million. Both numbers could have a negative impact on the dollar.

The main focus of the first half of the week is the Federal Reserve’s policy decision, scheduled at midnight according to India standard time. Fed expected to hold policy rate on hold at 5.00%. It wasn’t that long ago that the May meeting was seen as the one where policymakers would set in stone the path to a June rate cut. However, following the string of hotter-than-expected inflation and employment data, the timing has moved further out into the future, with a cut seen unlikely before September.

 Fed Chair Jerome Powell has said the central bank needs more confidence that inflation is heading towards its 2% goal before cutting rates. 

Thursday – US Weekly jobless claim, BOC Gov Macklem Speaks

The market will react on BOC Gov Macklem Speaks.

And the US Unemployment Claims numbers.  The data is expected to be 212K higher than the previous 207K.  This could weigh on the dollar.

Friday – US NFP data

The Economic Outlook for Friday is also one to watch out for. Markets are eyeing Friday’s nonfarm payrolls report. The US economy is not slowing down, adding 243,000 jobs in April, while losing 303,000 jobs in March. While the unemployment rate is expected to remain steady at 3.8%

Average hourly earnings (m/m) are unchanged at 0.3%

Also, the ISM Services PMI number is expected to be 52.00 from 51.4 previously, which could support the dollar. to have a positive effect.

Happy Trading!

Commodity Samachar
Learn and Trade with Ease

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