Week ahead in FX: ECB meeting, NFP and Australia GDP

The British pound was the strongest currency last week, rising 0.81% against the US dollar. The Sterling gained as opinion polls suggested that the risks of the UK leaving the EU were ebbing, underlining the fact that the sterling was focusing more on the Brexit risks than the fundamentals. Last week saw the UK’s first quarter GDP coming out unchanged at 0.40% at the second revision. The Canadian dollar was the second best currency pair, rising 0.65%. The Bank of Canada left interest rates unchanged last week. The Loonie was also supported by stronger oil prices.

The NZD and the EUR were the weakest currencies last week, including the AUD. The commodity-linked currencies posted steady declines as gold prices continued to fall for the fourth consecutive week. For the euro, despite an upbeat German GDP data, monetary policy divergence was back pushing the single currency lower.

Fundamentals for the Week 30/05 – 03/06

Date	Time	Currency	Detail	Forecast	Previous
30-May	00:50	JPY	Retail Sales y/y	-1.20%	-1.00%
	01:20	USD	FOMC Member Bullard Speaks
	02:00	AUD	HIA New Home Sales m/m		8.90%
	02:30	AUD	Company Operating Profits q/q	0.50%	-2.80%
	07:00	EUR	German Import Prices m/m	0.40%	0.70%
	All Day	EUR	German Prelim CPI m/m	0.30%	-0.40%
	07:45	EUR	French Consumer Spending m/m	0.10%	0.20%
	08:00	CHF	KOF Economic Barometer	102.9	102.7
		EUR	Spanish Flash CPI y/y	-1.00%	-1.10%
	13:30	CAD	Current Account	-17.4B	-15.4B
		CAD	RMPI m/m	2.20%	4.50%
		CAD	IPPI m/m	0.20%	-0.60%
	23:45	NZD	Building Consents m/m		-9.80%
31-May	00:30	JPY	Household Spending y/y	-1.00%	-5.30%
		JPY	Unemployment Rate	3.20%	3.20%
	00:50	JPY	Prelim Industrial Production m/m	-1.40%	3.80%
	02:00	NZD	ANZ Business Confidence		6.2
	02:30	AUD	Building Approvals m/m	-2.80%	3.70%
		AUD	Current Account	-19.3B	-21.1B
		AUD	Private Sector Credit m/m	0.50%	0.40%
	06:00	JPY	Housing Starts y/y	3.90%	8.40%
	07:00	EUR	German Retail Sales m/m	1.10%	-1.10%
	07:45	EUR	French Prelim CPI m/m	0.30%	0.10%
	08:55	EUR	German Unemployment Change	-4K	-16K
	09:00	EUR	M3 Money Supply y/y	5.00%	5.00%
		EUR	Private Loans y/y	1.50%	1.60%
	10:00	EUR	CPI Flash Estimate y/y	-0.10%	-0.20%
		EUR	Core CPI Flash Estimate y/y	0.80%	0.70%
		EUR	Italian Prelim CPI m/m	0.20%	-0.10%
		EUR	Unemployment Rate	10.20%	10.20%
	13:30	CAD	GDP m/m	0.00%	-0.10%
		USD	Core PCE Price Index m/m	0.20%	0.10%
		USD	Personal Spending m/m	0.60%	0.10%
		USD	Personal Income m/m	0.40%	0.40%
	14:00	USD	S&P/CS Composite-20 HPI y/y	5.10%	5.40%
	14:45	USD	Chicago PMI	50.8	50.4
	15:00	USD	CB Consumer Confidence	96.1	94.2
	23:45	NZD	Overseas Trade Index q/q		-2.00%
01-Jun	00:01	GBP	BRC Shop Price Index y/y		-1.70%
	00:30	AUD	AIG Manufacturing Index		53.4
	00:50	JPY	Capital Spending q/y	1.90%	8.50%
	02:00	CNY	Manufacturing PMI	50	50.1
		CNY	Non-Manufacturing PMI		53.5
	02:30	AUD	GDP q/q	0.60%	0.60%
	02:45	CNY	Caixin Manufacturing PMI	49.3	49.4
	03:00	JPY	Final Manufacturing PMI	47.6	47.6
	06:45	CHF	GDP q/q	0.30%	0.40%
	07:00	GBP	Nationwide HPI m/m	0.30%	0.20%
	07:30	AUD	Commodity Prices y/y		-9.40%
	08:15	CHF	Retail Sales y/y	-0.80%	-1.30%
		EUR	Spanish Manufacturing PMI	52.6	53.5
	08:30	CHF	Manufacturing PMI	54.2	54.7
	08:45	EUR	Italian Manufacturing PMI	53.5	53.9
	08:50	EUR	French Final Manufacturing PMI	48.3	48.3
	08:55	EUR	German Final Manufacturing PMI	52.5	52.4
	09:00	EUR	Final Manufacturing PMI	51.5	51.5
	09:30	GBP	Manufacturing PMI	49.6	49.2
		GBP	Net Lending to Individuals m/m	5.3B	9.3B
		GBP	M4 Money Supply m/m	0.20%	-0.40%
		GBP	Mortgage Approvals	68K	71K
	14:30	CAD	RBC Manufacturing PMI		52.2
	14:45	USD	Final Manufacturing PMI	50.5	50.5
	15:00	USD	ISM Manufacturing PMI	50.6	50.8
		USD	Construction Spending m/m	0.50%	0.30%
		USD	ISM Manufacturing Prices	58	59
	All Day	USD	Total Vehicle Sales	17.2M	17.4M
	Tentative	NZD	GDT Price Index		2.60%
02-Jun	00:50	JPY	Monetary Base y/y	27.20%	26.80%
	02:30	AUD	Retail Sales m/m	0.30%	0.40%
		AUD	Trade Balance	-2.11B	-2.16B
	06:00	JPY	Consumer Confidence	40.4	40.8
	08:00	EUR	Spanish Unemployment Change	-110.0K	-83.6K
	09:30	GBP	Construction PMI	52.1	52
	10:00	EUR	PPI m/m	0.10%	0.30%
	All Day	ALL	OPEC Meetings
	12:45	EUR	Minimum Bid Rate	0.00%	0.00%
	13:15	USD	ADP Non-Farm Employment Change	179K	156K
	13:30	EUR	ECB Press Conference
		USD	Unemployment Claims	271K	268K
	13:35	USD	FOMC Member Powell Speaks
	16:00	USD	Crude Oil Inventories		-4.2M
03-Jun	01:00	JPY	Average Cash Earnings y/y	0.90%	1.50%
	02:00	NZD	ANZ Commodity Prices m/m		-0.80%
	02:45	CNY	Caixin Services PMI	52	51.8
	08:15	EUR	Spanish Services PMI	55.6	55.1
	08:45	EUR	Italian Services PMI	52.3	52.1
	08:50	EUR	French Final Services PMI	51.8	51.8
	08:55	EUR	German Final Services PMI	55.2	55.2
	09:00	EUR	Final Services PMI	53.1	53.1
	09:30	GBP	Services PMI	52.3	52.3
	10:00	EUR	Retail Sales m/m	0.40%	-0.50%
	13:30	CAD	Trade Balance	-2.6B	-3.4B
		CAD	Labor Productivity q/q		0.10%
		USD	Average Hourly Earnings m/m	0.20%	0.30%
		USD	Non-Farm Employment Change	160K	160K
		USD	Unemployment Rate	4.90%	5.00%
		USD	Trade Balance	-41.9B	-40.4B
	14:45	USD	Final Services PMI	51.2	51.2
	15:00	USD	ISM Non-Manufacturing PMI	55.4	55.7
		USD	Factory Orders m/m	0.90%	1.10%

Time: GMT+1

Currencies/Events to Watch this Week

AUD: The first quarter GDP data will be the main event to watch for and one which could shift the tide in the AUD’s declines. Economists are looking at 0.60% quarter over quarter growth, same as the previous quarter. On a yearly basis, Australia’s GDP is expected to rise at a slower pace of 2.70% compared the 3.0% annualized GDP growth seen in the previous quarter. A weaker print could likely spur more AUD bears to keep the selling pressure on the Aussie. On Thursday, retail sales numbers will be out and is expected to show a modest increase of 0.30%, down from 0.40% increase seen in March.

NZD: Economic data from New Zealand this week is fairly limited. Building consents are due on Monday while overseas trade index is expected on Tuesday, for the first quarter. The bi-weekly GDT price index is expected on Wednesday with the previous print showing an increase to 2.60% reversing the previous print of 1.40% decline.

JPY: It is likely to be a slow week for the yen next week with the unemployment rate coming out on Monday. Expectations show an unchanged print of 3.20%. Industrial production data is due later and is forecasted to decline 1.50%, down from March’s 3.80% on a monthly basis while on a year over year basis, Japan’s industrial production is expected to fall 5.20%, which is one of the strongest yearly declines since 2014. Later in the week, manufacturing PMI is due followed up by BoJ’s board member, Sato’s speech.

CNY: From China, the markets will be looking to the manufacturing and services PMI this week. Manufacturing PMI is expected to slip to 50.0 in May, which could erase the gains made since March’s increase to 50.2. The Caixin manufacturing PMI is expected to show a contraction with estimates pointing to a slowdown to 49.2 in May from 49.4 in April. On the services side, the Caixin services PMI is expected to rise to 52.0 from 51.8 in April.

EUR: Data from the Eurozone this week will start with inflation estimates. Forecasts are for confirmation that the Eurozone economy slipped into deflation in May, with CPI expected to fall 0.10% on a year over year basis in May. The core CPI, on the other hand, is expected to be steady at 0.70%. The ECB will be meeting next week on June 2nd for its monetary policy meeting. No changes are expected at this event. On Friday, retail sales numbers are expected to show a potential rebound, with sales expected to rise 0.20% in April, after falling 0.50% in March.

CHF: Data from Switzerland this week will include the quarterly GDP report. Estimates point to a 0.20% quarterly increase in GDP in the first quarter of 2016. This is slower than the 0.40% quarterly GDP growth seen in Q4 2015. On an annualized basis, however, Swiss GDP is expected to expand 0.90%, up from 0.40% in the previous quarter.

GBP: From the UK PMI data will be in focus. Manufacturing PMI is expected to moderate with estimates pointing to increase to 49.6 in May, up from 49.2 in April. Construction and services PMI are expected to tick modestly higher.

CAD: From Canada, the markets will be looking to the monthly GDP numbers. Expectations call for a no change to the GDP in March, which follows February’s 0.10% declines. On a quarterly basis, the annualized GDP is expected to rise 2.80%, up from 0.80% in the previous quarter.

USD: A busy week for the US after the markets re-opens on Monday. The PCE price index is expected to rise 1.10%, posting a strong rebound from 0.80% increase seen in March. The Core PCE Price index is expected to rise 1.60% on a year over year basis. On Wednesday, the ISM manufacturing index will be in focus with expectations showing a soft decline to 50.5 in May, from 50.8 in April, while ISM prices paid is expected to slip to 58 from 59.0 in April. Thursday will see the private payrolls report from ADP, which is expected to show a 178k increase in May, up from 156k jobs in April. The ADP report will set the stage for the monthly NFP data on Friday. The US unemployment rate is expected to fall to 4.90%, from 5.0% while the monthly nonfarm payrolls are expected to show 160k jobs being added to the economy.