Key Fundamental Factors this Week (5/25 – 5/29)

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Key Fundamental Factors this Week (5/25 - 5/29)

Last week, the FOMC minutes reiterated optimism despite weak data so far this year. We know the June rate hike is out of the question, and there are doubts on the FOMC’s ability to raise rates in September. The EUR took a step back across the board as the ECB continues its aggressive stimulus measures. Talk from the ECB about front-leading QE did also pressure the euro. Let’s see what’s in store for us this week in terms of fundamental factors.

Tuesday 5/26

US Durable Goods Orders m/m (Apr.)
Forecast: -0.4%
Previous: 4.7% (revised from 4.0%)
Core Durable Goods Orders m/m (Apr.)
Forecast: 0.5%
Previous :0.3% revised from -0.2%)
core durable goods april
(click to enlarge; source: forexfactory.com)

Durable goods orders have always been volatile from a month to month basis. But even the core reading would have been all negative so far this year if not for the the upward revision to the March reading. If the FOMC’s optimistic projections are true, we should see 2-3 consecutive months of decent growth around 0.3%-0.5%.

US CB Consumer Confidence (May):
Forecast: 95.3
Previous: 95.2

Wednesday (5/27)

BoC Monetary Policy Decision: 
Forecast: 0.75%
Previous: 0.75%
The Bank of Canada is expected to leave the overnight rate at 0.75%. It has sounded more optimistic lately despite weak data (kind of reminds you of the FOMC’s stance). In fact much like the FOMC, it expects growth to pick up in the second half of 2015. However, unlike the FOMC it has not mentioned anything about raising rates.

Thursday (5/28)

US Jobless Claims:

Forecast: 272K
Previous: 274K
jobless claims
(click to enlarge; source: forexfactory.com)

Jobless claims have been steadily trending down which is in-line with the FOMC’s forecast. In the beginning of the year a reading under 300K was impressive. Now we need to see the number under 280K.

ANZ Business Confidence (May)
Previous 30.2

Friday (5/29)

US Prelim GDP q/q (Q1)
Forecast: -0.9%
Advanced Reading (0.2%)
us gdp q1
(click to enlarge; source: forexfactory.com)
After the advanced reading of 0.2%, the second print will likely be -0.9%. While this is expected and already acknowledged, it should still keep weight on the USD until we see successive months of strong growth and a Q2 reading that might have to be at least 1.0%. Otherwise, that September rate hike might not happen, and the USD might continue to slide.

CAN GDP m/m (Mar.)
Forecast: 0.2%
Previous: 0.0%
Growth in Canada has been slow in the first couple of months of the year, and even a reading around 0.2% for March would reflect  a relatively flat first quarter. A negative reading would keep the CAD pressured in the short-term . The thing is, no one will be surprised by negative data, and the BoC already acknowledged the slowdown, so we should not read too much into the March GDP print.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.