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Weekly Market Outlook: US GDP and BoC Meeting

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The economic calendar for the week ahead will see GDP themes and monetary policy dominating the headlines. This comes against the larger backdrop of the escalating trade wars and political changes.

Switzerland, Canada, and the United States will be releasing their respective GDP numbers this week. The US second revised GDP report will, of course, remain the main highlight. Growth is forecast to be slightly adjusted lower for the first quarter.

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Data from Australia will see the building approvals and capex spending report. Capex spending could potentially shed light on business investment. The data comes ahead of the RBA’s meeting due in a week’s time. Speculation is rife that the RBA could possibly lower interest rates.

The week starts off with the EU concluding its parliamentary elections. On the economic front, data will focus on the regional GDP reports from France and the preliminary inflation reports from Germany, France, Spain, and Italy.

Here’s a quick recap of what’s to come in the currency markets this week.

USD: Revised GDP and PCE Data

The US markets start off the week on a slow note with markets closed on Monday due to the Memorial Day bank holiday. The rest of the week, however, is packed with some high ticket items.

The second revised GDP estimates will be due over the week. Economists’ polled forecasts that the second revision to the GDP for the first quarter will be at 3.1%. This compares to the 3.2% print seen from the initial revision.

Despite the slightly lower downside revisions, the data is unlikely to influence the markets unless there is a strong deviation from the forecasts.

Later in the week, the personal consumption expenditure data is due to come out. The Fed’s preferred gauge of inflation is forecast to rise 0.2% on the month. This would bring the core PCE to post an unchanged annualized gain of 1.6%.

The core PCE price index’s forecast could show a slower pace of increase from 0.9% during the month before. Besides the PCE data, personal income and spending reports alongside data from the housing markets will be coming out during the course of the week.

Bank of Canada Expected to Hold Rates Steady

The Bank of Canada will be holding its monetary policy meeting this week on Wednesday. According to the economists polled, the BoC is expected to keep interest rates unchanged at 1.75% at this week’s meeting.

This follows the slightly dovish trajectory for the BoC which has kept rates unchanged for the past few monetary policy meetings.

Focus will shift to the forward guidance from the BoC. The recent economic data painted a mixed picture. But, the Canadian labor market remains a strong point. This could offer some encouragement for the BoC governor Poloz.

Still, given the recently escalating trade tensions with China, the Bank of Canada officials may choose to tread carefully. This could result in the interest rates staying unchanged for at least the most part of the second quarter of the year.

Besides the BoC meeting, Canada’s GDP numbers are also due over the week. In the previous month, monthly GDP fell 0.1%.

EUR: Conclusion of EU elections and Focus on Economic Reports

Data from the Eurozone will primarily relate to the EU elections wrapping up. Investors do not expect to see the EU parliamentary elections impacting the markets strongly.

On the economic front, investors will be looking at the regional performance. Preliminary inflation reports will be coming out from Germany, France, and Italy. Overall, consumer prices in the Eurozone could remain steady during the month of May.

Data from France will also see the GDP numbers for the quarter. Growth is forecast to be confirmed rising 0.3% during the first quarter of the year.

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