Key Fundamental Factors this Week (6/1 – 6/5)

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Key Fundamental Factors this Week (6/1 - 6/5)

The USD remained resilient despite a downward revision to the GDP data for Q1. Let’s see what’s in store for us this week in terms of fundamental factors.

6/1 (Monday)

UK Manufacturing PMI (May)
Forecast: 52.7
Previous: 51.9

US ISM Manufacturing PMI (May)
Forecast: 51.9
Previous: 51.5

6/2 (Tuesday)

RBA Monetary Policy: The market is expecting the RBA to hold rates at 2.00%. The two 25-bps rate cuts earlier in the year area likely to be all the rate cuts this year.

6/3 (Wednesday)

AUS GDP q/q (Q1)
Forecast: 0.6%
Previous: 0.5%
aus gdp
(click to enlarge; source: forexfactory.com)
If the Q1 GDP data does come in above 0.5, it would reflect a rebound and encourage the RBA to shift away from the dovish monetary policy stance. A 0.6% or above print should support a bullish outlook in the AUD/NZD

ECB Monetary Policy Statement and Press Conference: The ECB is expected to hold the overnight lending rate at its historic low of 0.05%. The euro has been pressured because it seems like the ECB is being aggressive with its QE implementation. Let’s see if this is still the case. If the ECB sounds optimistic while talking about scaling out of QE, then the euro might gain dramatically. But most likely, we will see much of the same, and the Euro should be weak against the US Dollar.

US ADP Non-Farm Employment Change (May)
Forecast: 200K
Previous: 169K
After a couple months of disappointing data, the jobs data for May is suppose to show a rebound. This could give the USD a mid-week boost, but the main jobs data is still Friday’s NFP release.

CAN Trade Balance (April)
Forecast: -2.0B
Previous: -3.0B

US Trade Balance (Apri)
Forecast: -44.2B
Previous: -51.4B

US Services PMI (May)
Forecast: 57.2
Previous: 57.8

6/4 (Thursday)

AUS Retail Sales m/m (Apr.)
Forecast: 0.3%
Previous: 0.3%

AUS Trade Balance (Apr.)
Forecast: -2.11B
Previous: -1.32B

BoE Monetary Policy Statement: The Bank of England is expected to hold its official bank rate at 0.50% and keep the asset purchase program at 375B pounds. There is a sense that the bank is optimistic and has turned the corner from being dovish earlier in the year when it even had a rate cut on the table. Further evidence that the BoE will not be considering a rate cut should be a drag on the EUR/GBP and support the GBP/JPY as it makes new highs on the year.

US Jobless Claims
Forecast: 277K
Previous: 282K

CAN Ivey PMI (May)
Previous 58.2

6/5 Friday)

US Non-Farm Payroll Employment Change (May)
Forecast: 226K
Previous: 223K
US NFP May 2015
(click to enlarge; source: forexfactory.com)

US Unemployment Rate (May)
Forecast: 5.4%
Previous: 5.4%

Other than the ECB and BoE monetary policy statements and press conferences, the main fundamental risk in the forex market will be Friday’s US Non-Farm Payroll report. If the ADP report rebounds as expected, we can have expectation that the NFP will be at or above the April print. If it is under 200K, we should be ready for a sharp USD slide. The market forgave the weak GDP data for Q1 because it is expecting good data in Q2. But if the job market is not heating up as expected, the optimist will quickly wear off and the USD will likely give up a big chunk of the gains in the second half of May.

CAN Employment Change (May)
Forecast: 10.2K
Previous: -19.7K
Canada employment change May
(click to enlarge; source: forexfactory.com)

CAN Unemployment Rate (May)
Forecast: 6.8%
Previous: 6.8%