Following the BoC policy meeting last Wednesday, this week, the central bank torch will be passed to the RBA and the ECB. The RBA is largely anticipated to cut rates and thus, if this is the case, investors will quickly turn attention to the accompanying statement for clues on whether more cuts are underway. With regards to the ECB, no change in interest rates is expected, but investors may be eager to find out whether officials will push further back the timing of when they expect rates to start rising, and whether they will hint at additional policy measures. We also get the US employment report for May.
On Monday, during the European trading, we get the final manufacturing PMIs for May from several of the Eurozone’s members, as well as for the bloc as a whole. That said, as it is the case most of the times, the final prints are expected to confirm their preliminary estimates.
We get the May manufacturing PMI from the UK as well, while on Tuesday, the construction print is due to be released. The services index will be released on Wednesday. From the PMIs, investors could get an idea of how all this delayed Brexit uncertainty has affected the economy, but once again we don’t expect these releases to prove major market movers. GBP-traders are likely to stay more focused on the political scene, and especially on who could be the UK’s next Prime Minister.
More manufacturing PMIs will be coming later in the day, from the US. We have the final Markit print for May, as well as the ISM index for the month. As it is the case most of the times, the Markit number is expected to confirm its preliminary estimate, while the ISM one is anticipated to have risen to 53.0 from 52.8. That said, bearing in mind that the preliminary Markit figure suggested a tumble to 50.6 from 52.6, we see the risks surrounding the ISM forecast as tilted to the downside.
On Tuesday, during the Asian morning, the RBA will decide on interest rates. At their latest meeting, RBA officials decided to stand pat, which came as a surprise to market participants expecting a rate cut. That said, the minutes of that meeting revealed that the Bank’s forecast scenario was based on the assumption that interest rates will be in line with market pricing, which...
Read the full financial markets weekly outlook on JFD Research.