Weekly outlook, May 31 to June 4, 2021: key economic events to watch
The broad-based US dollar will end on a bullish trajectory this week as US President Joe Biden on Friday proposes a $ 6 trillion budget for 2022 as the United States continues its economic recovery from COVID-19. This was seen after the release of positive employment data on Thursday. The number of initial jobless claims filed over the past week in the United States fell to 406,000, a 14-month low. Meanwhile, US GDP grew 6.4% quarter-on-quarter in the first quarter of 2021, slightly below the 6.5% growth forecast, but the same growth as in the previous quarter. Alternatively, the dollar’s rise could be short-lived or temporary, as the optimistic market mood, supported by multiple factors, tends to undermine safe-haven assets like the US dollar.
Looking forward to the week ahead, the series of manufacturing PMI and unemployment rates, along with the rate statement from the RBA and BOE Gov Bailey Speaks, may make headlines to keep markets moving. Apart from that, U.S.-China trade headlines, the Israeli-Palestinian struggle and coronavirus headlines will also follow closely as they could play a key role in determining risk levels in the market.
Main economic events to watch this week
1) CNY: Manufacturing PMI – Monday, 2:00 GMT
These data are usually released by the China Logistics and Purchasing Federation (CFLP), which examines business conditions in China’s manufacturing sector. Figures above 50 indicate the development of the Chinese economy. Conversely, a reading below 50 signals a contraction. As the Chinese economy influences the global economy, this economic indicator would impact the Forex market. That way, a result above 50 would be positive (or bullish) for the CNY. Conversely, the exit below 50 is considered bearish for the CNY currency.
DATE: 04/30/2021 06:00
2) AUD: RBA Interest Rate Decision – Tuesday, 5.30am GMT
i) RBA Interest Rate Decision – If the RBA is hawkish about the economy’s inflationary outlook and raises interest rates, it is considered bullish for the AUD currency. Conversely, if the RBA has an accommodating stance on the inflationary outlook of the economy and keeps the interest rate going or cuts the interest rate, it is considered bearish for the AUD currency.
DATE: 04/05/2021 09:30
ii) RBA Rate Statement – Decisions regarding this interest rate are made by the Reserve Bank Board and are explained in a press release, which announces the decision at 2:30 p.m. after each Board meeting. This is a basic tool used by the RBA Reserve Bank Board to communicate with investors on monetary policy. It contains the outcome of their interest rate decision and commentary on the economic conditions that influenced their decision. Apart from that, he discusses the economic outlook and gives new clues about future decisions.
These meetings bring together representatives of the 13 members of OPEC and 11 other oil-rich countries. However, the purpose of this meeting is to coordinate and unify the oil policies of its member countries and to ensure the stabilization of oil markets with the aim of ensuring an efficient, economical and regular supply of oil to consumers. They discuss multiple issues concerning the energy markets and, above all, agree on the amount of oil they will produce. When the meeting is over, officials usually chat with reporters throughout the day. As a result, the official statement covering policy changes and goal achievement is issued after the meetings have ended.
4) USD: US ISM Manufacturing PMI – Tuesday, 3:00 p.m. GMT
ISM Manufacturing PMI – This data is typically released by the Institute for Supply Management (ISM) Manufacturing Index, which shows business conditions in the US manufacturing sector. It is one of the main indicators of the overall economic situation in the United States. The result above 50 would be positive (or bullish) for the greenback. Conversely, production below 50 is considered bearish for the currency.
DATE: 03/05/2021 19:00
5) CAD: Gross Domestic Product (MoM) – Tuesday, 13:30 GMT
Gross Domestic Product (MoM) – Statistics Canada usually released this data, which measures the total value of all goods and services produced by Canada. Changes in the GDP price index are considered a general measure of economic activity and health in Canada. Thus, high numbers are considered positive or bullish for the CAD currency; conversely, a downtrend is considered bearish for the currency CAD.
DATE: 04/30/2021 5:30 PM
6) AUD: Australian Gross Domestic Product (QoQ) – Wednesday, 14:30 GMT
Gross Domestic Product (QoQ) – This data is normally published by the Australian Bureau of Statistics, which examines the total value of all goods and services produced by Australia. GDP is considered a key measure of economic activity and health. In this way, the increasing trend has a positive or bullish effect on the AUD currency. Conversely, the downtrend is considered bearish for the AUD.
DATE: 03/03/2021 05:30
7) USD: US ISM Services PMI – Wednesday, 3:00 p.m. GMT
ISM Services PMI – This data is typically published by the Institute for Supply Management (ISM), which measures business conditions in the US non-manufacturing sector. It should be noted that the non-manufacturing sector has neither a positive nor a negative influence on the manufacturing GDP or ISM. Thus, the result above 50 is considered positive (or bullish) for the USD. Conversely, below 50 is considered bearish for the greenback.
DATE: 05/05/2021 19:00
8) GBP: Speech by BoE Governor Bailey – Thursday, 5:00 p.m. GMT
Andrew Bailey is the current Governor of the Central Bank of England. He started this journey on March 16, 2020, at the end of Mark Carney’s session. He worked as Managing Director of the Financial Conduct Authority before being selected. This British central banker was also deputy governor of the Bank of England from April 2013 to July 2016 and cashier of the Bank of England from January 2004 to April 2011. As governor of the central bank, he controls short-term interest rates. , which in turn, he has more influence on the value of UK currency than any other person. This is why traders watch its public commitments closely, as they are typically used to leave detailed clues about future monetary policy. Thus, a hawkish tone is considered bullish for the GBP currency. Conversely, an accommodating tone is seen as bearish for the GBP currency.
9) CAD: Employment rate – Friday, 13:30 GMT
i) Job Change – These data are generally published by Statistics Canada, which measures the number of people employed in Canada. Simply put, increasing this indicator has a positive impact on consumer spending, which tends to boost economic growth. Therefore, the high numbers are considered bullish for the CAD currency. Conversely, low numbers are considered negative (or bearish) for the CAD currency.
AGAINST: -175 K
DATE: 07/05/2021 17:30
ii) Unemployment rate – Statistics Canada generally publishes these data, which measure the number of unemployed divided by the total civilian labor force. It is one of the critical indicators of the Canadian economy, as the number of unemployed is an important sign of overall economic health, as consumer spending is strongly correlated with labor market conditions. If the rate increases, it shows a lack of expansion in the Canadian labor market. As a result, the rising unemployment rate is causing the Canadian economy to weaken. However, the low number is considered bullish for the CAD; conversely, the rise is considered negative or bearish for the currency CAD.
DATE: 07/05/2021 17:30