On Monday 5th: The German Trade Balance and the US ISM Services PMI are both due.
On Tuesday 6th: The RBA meets on monetary policy and the Canadian Ivey Purchasing Managers Index is published.
On Wednesday 7th: Australian GDP data is due, along with Chinese, Canadian and US Trade Balances, and the BoC is due to meet on monetary policy.
On Thursday 8th: The Australian Trade Balance is published.
On Friday 9th: Chinese inflation data and Canadian Employment data are released.
Weekly outlook
Investors will no doubt be able to breathe a sigh of relief this week, as the US debt ceiling negotiations finally came to a result on the 31st May, with the President likely signing the bill into law before the Monday deadline. A costly default avoided and hopefully no ratings drop to come, after last week, when the US was placed under evaluation for a potential downgrading by the credit rating firm DBRS Morningstar, echoing similar cautions issued by Fitch, Moody's, and Scope Ratings.
In monetary policy news, the trend looks to be heading towards maintaining paused rates this week for Canada and Australia, as they await lags in policy to even out and bring inflation back to acceptable levels. Highlighting the effect of tighter policy in Australia, the March quarter of 2023 saw a 12.6% growth in new personal insolvencies, as reported by the Australian Financial Security Authority (AFSA), and economists believe there is more pain to come.
Monday 5th of June
Germany's trade surplus grew to EUR 16.7 billion in March from EUR 16.1 billion in February, above EUR 16.1 billion market estimates. As exports have gradually continued to be greater than imports each month lately, the trade surplus was at its highest level since February 2021 last month. However a slight dip to EUR 15.1 billion is forecast for the next round of data released at 6:00 AM GMT.
The ISM Services PMI, due out at 2PM GMT, rose to 51.9 in April, up from 51.2 in March, and marginally above market expectations. This represents the fourth consecutive month of expansion in the services sector, and analysts are looking for further growth for May, up to around 52.1.
Tuesday 6th of June
The Reserve Bank of Australia is due to meet on monetary policy today with its statement released at 4:30 AM GMT. The official cash rate in Australia unexpectedly increased by 25 basis points in May, from April's 3.6% up to 3.85%. Borrowing costs have increased to their highest level since April 2012, as the bank has hiked rates for the eleventh time in the last year despite market projections of a respite.
The RBA made the decision based on a worry that Australia's current inflation rate was still too high at 7% at the time, and the unemployment rate remained low. Even with the most recent CPI sitting at 6.8%, most analysts suggest that the official cash rate will remain stable at 3.85% at this coming meeting.
Canada's Ivey Purchasing Managers Index dropped to 56.8 in April from 58.2 the month before. The most recent data suggested that the Canadian economy had grown for four months in a row and if the results of the most recent report, released at 2:00 PM GMT, are as expected at around 56.5, then this trend will continue.
Wednesday 7th of June
Following an upwardly corrected 0.7% expansion in Q3 last year, the Australian economy grew by 0.5% quarter over quarter in the final three months of 2022. The economy will have expanded for the sixth time in a row if predictions are confirmed for the next quarter's report, due at 1:30 AM GMT, where growth of 0.4% is expected. 2.6% growth is forecast year on year for the first quarter.
In April this year, China's trade surplus soared from USD 49.5 billion in April to USD 90.2 billion, easily surpassing market forecasts of USD 71.6 billion. When the May figures are released at 3:00 AM GMT, expectations are for a further rise to USD 91.0 billion.
Canada's Trade Balance, to be released today at 12:30 PM GMT, showed a surplus in March of CAD 0.97 billion, which was much higher than the consensus estimate of CAD 0.20 billion and a sharp reversal from February's revised deficit of CAD 0.49 billion. April figures are predicted to show a drop in the surplus to CAD 0.6 billion.
Compared to market expectations of a $63.3 billion deficit, the US Trade Balance shrunk to a four-month low of $64.2 billion in March from $70.6 billion in February. Sales of crude oil, fuel oil, natural gas, cars, and travel drove a 2.1% increase in exports, while non-monetary gold and transportation saw declines in sales. When the newest report is published at 12:30 PM GMT, the expectation is that the deficit will again grow to around $75 billion.
The Bank of Canada is scheduled to meet on monetary policy this week, with their decision statement released today at 2:00 PM GMT. As expected, the bank kept its overnight rate at 4.5% at its April meeting, and reaffirmed its commitment to closely monitoring economic data ahead of any future policy rate decisions. Consensus estimates are for another pause this month to remain at 4.5%.
Thursday 8th of June
The Australian Trade Balance, which is due at 1:30 AM GMT, showed a surplus for March of AUD 15.27 billion, up from the previously reported AUD 14.15 billion and much above consensus estimates. A dip to AUD 14.4 billion is expected for April.
Friday 9th of June
China's annual inflation rate dropped from 0.7% in March to 0.1% in April, falling short of market expectations of 0.4%. The May figures, due at 1:30 AM GMT, are forecast to show a slight rise to 0.2% year on year, while analysts expect a flat 0% result compared to last month.
Canada releases an assortment of employment data for the month of May today from 12:30 PM GMT. First of which is the Unemployment Rate, which for the fifth consecutive month, remained at 5% in April, coming in close to the record low of 4.9% seen in June and July 2022. Analysts predict this will rise to 5.1% for the coming report.
The boost in part-time employment in April drove the Canadian economy to add 41,000, and the Employment Change data for this month is expected to show further growth of 40,000 positions.
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