Weekly Outlook of Financial Markets for June 3-7

Major commodities including oil, silver and natural gas changed direction and fell during last week. Equities markets cooled down while the forex markets didn’t have a clear trend during last week. Will this unclear trend persist? In the upcoming week several reports, speeches and events will unfold and could affect commodities, equities and forex markets; these include: U.S non-farm employment report, GB and U.S manufacturing PMI, Australia’s GDP first quarter estimate, Spain’s employment situation, ECB, RBA and BOE rate decisions and monetary policy meetings, U.S China and Canada’s trade balance reports, German industrial production, and U.S. jobless claims. Here is an economic outlook for the week of June 3rd to June 7th regarding the U.S, China, Euro Area, Canada, and Great Britain.   

(All times GMT):

Monday, June 3rd

00:30 – Australian Retail Sales: This monthly report will refer to April 2013. In the previous report, the seasonally adjusted retail sales decreased by 0.4% during March; this news may affect the Aussie dollar, which tends to be linked with commodities prices;

09:30 – GB Manufacturing PMI: This report will pertain to Great Britain’s manufacturing sector in April 2013. In the latest update regarding March 2013 the index slightly increased to 49.8. This rate gain means the manufacturing sector is still contracting but at a slow pace; this index might affect GB Pound;

15:00 – U.S. Manufacturing PMI: This report will refer to May 2013. During April, the index declined to 50.7%; this means the manufacturing is growing at a slower rate; this index may affect foreign exchange rates, crude oil and natural gas markets.

Tuesday, June 4th

05:30 – Reserve Bank of Australia – Cash Rate Statement: Following the latest decision of RBA to reduce its cash rate by 0.25 pp to 2.75% – its lowest level – this decision dragged down the Aussie dollar and commodities prices along with it. This means, it’s less likely the RBA will cut its rate again this month. Nonetheless, if the RBA will decide to reduce its rate again, this news may pull further down the Australian dollar, which tends to be strongly linked with commodities;

08:00 – Spain’s unemployment Change: the number of people unemployed in Spain fell in April by 46.1k. This mean, the employment situation in Spain has slightly improved. If in the upcoming report the number of unemployed will rise, this may pull down the Euro;

13:30 –American Trade Balance: This monthly report for April will show the developments in imports and exports of goods and services to and from the U.S, such as commodities such as oil and gas; according to the recent American trade balance report regarding March the goods and services deficit declined during the month to $38.8 billion;

13:30 – Canadian Trade Balance: In the previous report regarding March 2013, exports sharply rose by 5.1% and imports increased by 1.7%; as a result, the trade balance shifted from a $1.2 billion deficit in February to $24 million surplus in March; this report may affect the Canadian dollar which tends to be correlated with prices of commodities;

02:30 – Australian GDP First Quarter 2012: This quarterly report will refer to the Australia’s GDP growth rate for the first quarter of 2013. In the fourth quarter of 2012, the GDP expanded by 0.6% (seasonally adjusted). The slowdown in China’s economy might have also adversely affected the progress of Australia’s economy. Australia is among the leading countries in exporting commodities including as oil, LNG, and metal ores; if the GDP growth rate will slip, it could affect the path of Australia dollar (see here last report);

Wednesday, June 5th

13:15 – ADP estimate of U.S. non-farm payroll: ADP will publish its estimate for the forthcoming U.S non-farm payroll change for May 2013 that will come out on Friday;

15:00 – U.S. ISM Non-Manufacturing PMI: This monthly update will refer to the changes in the non-manufacturing sector during May 2013. For the last update, this index slipped to 53.1% – thus, the non-manufacturing is expanding and at a slower rate than in the previous month; this index may affect the US dollar;

15:00 – U.S Factory Orders: This report will present the developments in U.S. factory orders of manufactured durable goods during May; in the previous report factory orders fell by 4%; this report will offer some insight regarding the growth of the U.S economy;

15:30 – U.S Crude Oil Stockpiles Weekly Update: the EIA (Energy Information Administration) will publish its weekly update on the U.S oil and petroleum stockpiles for the week ending on May 31st; in the recent update for May 24th, stockpiles rose by 9.7 ml bl and reached 1,812.2 ml bl.

02:30 – Australian Trade Balance: The report will pertain to April. In the last update, regarding March, the seasonally adjusted balance of goods and services rose to a $307 million surplus. The export of non-monetary gold fell by $114 million; if the gold exports will continue to fall in March, it might suggest a decline in demand for non-monetary gold (see here recent report);

Thursday, June 6th

Tentative – Spanish 10 Year Bond Auction: Spain will issue its monthly with bond auction; in the last bond auction, which was held at the middle of April, the average rate reached 4.61% – the highest rate for that month;

11:00– German Industrial Production: This report will refer to the changes in the industrial production of the German for May; in the latest report the German industrial production rose by 1.2% (M-O-M) during April;

12:00 –BOE Rate Decision & Asset Purchase Plan: Bank of England will announce its basic rate for June 2013; the MPC will also state of any new changes to its asset purchase pogrom; as of May, BOE kept the rate unchanged at 0.5% and the asset purchase plan s at £375 billion;

12:45 – ECB Rate Decision: ECB will decide its cash rate for June. Following the last meeting in which the ECB cut its rate by 0.25pp to 0.50% rate, all eyes will be on Draghi’s next move. Some suspect he might change ECB’s monetary policy again. Some suspect ECB may provide a negative deposit rate. I think this scenario is less likely. But ECB will need to address to the ongoing economic slowdown, high employment and low inflation.  If ECB will cut its cash rate again, the Euro is likely to tumble down and it will also drag along with it commodities prices;

13:30 – U.S. Jobless Claims Weekly Report:  this weekly update will pertain to the shifts in the initial jobless claims for the week ending on May 31st; in the previous report the jobless claims increased by 10k to reach 354k; this forthcoming weekly report may affect the U.S dollar and consequently commodities and stocks markets;

15:30 – EIA U.S. Natural Gas Storage Update: the EIA weekly update regarding U.S. natural gas market will refer to the latest changes in natural gas production, storage, consumption and rates as of May 31st; in previous weekly update, natural gas storage increased by 88 Bcf to 2,141 Bcf;

Friday, June 7th

13:30 – Canada’s Employment Report: In the latest employment update for April 2013, unemployment remained unchanged at 7.2%; the employment rose by 12.5k during the month. The forthcoming report might affect the Canadian dollar and consequently commodities;

13:30 – U.S. Non-Farm Payroll Report: in the latest update for April 2013, the labor market increased again: the number of non-farm payroll employment rose by 165k; the U.S unemployment rate inched down to 7.5%; if in the upcoming report the employment will rise again by over 150 thousand (in additional jobs), this may lower the prices of gold and silver (see here my last review on the U.S employment report);

Tentative –China’s Trade Balance: based on the recent monthly report, China’s trade balance rose to a $18.2 billion surplus; if the surplus will further increase, it could indicate that China’s economic growth is picking up and thus may positively affect prices of commodities.

Tentative – China’s CPI: during April, the Chinese inflation rate increased to an annual rate of 2.4%; this rate is still below China’s inflation target of 4% in annual terms. The low inflation is another indication for a slowdown in the economic activity in China. If the inflation will pick up, it could indicate that China’s economic progress is warming up; China is among the leading countries in importing commodities such as gold and oil;

For further reading: