Another Payroll week
After the USA, now eyes turn on to Euro Zone CPI data this week, to see whether in Europe also it will rise above the central bank target as united states, or not. On the other hand, with new versions of the Corona Virus in Southeast Asia, we have to see what is going on there, while economic data with the event of the week, NFP data will move the markets in the week ahead. Let`s take a quick look at the most important events of the week.
Chinese PMI data, Monday
While Monday is Memorial Day and a banking holiday in the U.K., Chinese Manufacturing and composite PMI will get the market attention. USD weakness and better recovery in China brought the Chinese Yuan to its higher level against the U.S. Dollar since 2018. The current strong Yuan is not what the People`s Bank of China wants, so we have to see what policymakers will do in the world`s largest factory going to do among economic recovery. USDCNH will be under pressure under 6.43 against the dollar. However, any changes in the USDCNH trend need to recover above 6.55. All depend on the Market`s Reaction to Chinese data.
Australian Reserve Bank meeting, Tuesday.
After last week`s RBNZ meeting, it is RBA`s turn. Last week, the central bank in New Zealand had a bit Hawkish tone in the statement, and now market participants are waiting to see how the Australian bank will react. A relatively low infection case with a solid economic rebound in Australia, while neighbor country started hawkish plans, puts the Hawkish odds in the stronger position. However, we are not expecting any changes in the Central bank`s cash rate at 0.1% through mid-2023, but stimulus and asset purchasing can decline.
Australian dollar falling under 0.77 fundamental level. Any Hawkish policy is expected to put the Aussie under pressure and confirm the current technical downtrend.
OPEC meeting and a big question, Tuesday
OPEC and its allies, known as OPEC plus, will have a meeting on Tuesday. Among increasing demand in the market, investors expect to stay committed to their easing of oil supply curbs. However, the main question in the market is Iran deals with world powers about its nuclear plan. A successful deal will add 2 million barrels a day to the market supply by Iranian output. Oil extended its uptrend rally last week as well, and it`s up about 30% in 2021 so far. WTI is moving in a clear uptrend, and any number above $62.60 will hold it in the same direction for higher levels.
Euro Zone Inflation must be watched closely, Tuesday
After last week`s sharp gain of American Inflation, this Tuesday, eyes will be on Eurozone flash inflation, especially now, when the next European Central Bank meeting is getting closer. The Euro Zone block is approaching the ECB`s 2% target. The fastest inflation growth in years becomes evident after the sharp recovery of Oil prices in the past year and the sharp fall of last year`s prices. Like FED members, ECB members also emphasize that this inflation rise is short-lived, and stimulus is still needed to secure the recovery speed. It is expected to see the current newly-created downtrend in the EURUSD chart, especially if the Euro breach under 1.21 dollars.
And finally, Friday and event of the week, NFP.
This Friday, we will know the answer to this question, how fast is the U.S. recovery? Like every first Friday of the month, this week also has to closely watch the U.S. monthly jobs report. Last month Non-farm payrolls added about 266,000 jobs, much less than over 1 million market estimates. And now, demand is expecting to have 600,000 up to 800,000 new jobs in May. With Friday`s decline, SP500 is just 0.7% lower than its May 4 record high and still trading above the trend line and both moving averages. With estimated data, SP500 and other U.S. leading indices are also expecting to rise and print new record highs.
