The next week will be full of interesting macroeconomic events. The Bureau of Labor Statistics will publish a report on the American labor market (popular non-farm payrolls), the PMI will be published and a meeting and decision of the European Central Bank will be held along with a press conference.
This week passed with the escalation of the trade war, the collapse of oil prices, declines in the stock market and the bull market in the bond market. It seems that the next week may also bring a continuation of the trade war, which the US president also started with Mexico at the end of this week. Investors can look at the US relationship with China. The US still has room to impose further tariffs, and China, in turn, can respond to this as it was in the passing week.
Meanwhile, in the report on the American labor market, apart from looking at the change in employment and the unemployment rate, it will also be worth paying attention to the increase in wages. Employment in the US may increase slightly less than the previous month's reading indicated, but the labor market should remain strong. According to the National Federation for Independent Businesses, almost 40 percent. companies are not able to fill vacancies due to lack of employees. This, in consequence, may translate into higher wages, although employers try to retain employees with non-wage benefits - according to surveys.
The inflation reading from the euro zone will be released next week. Market inflation expectations are falling, which does not suggest that prices in Europe should increase significantly. Lack of inflation approaching the target along with worse macroeconomic data may lead to pressure on the European Central Bank. Probably during the next week's meeting will be presented details about the new round of cheap loans for banks - TLTRO. Attention will also be given to the latest macroeconomic projections. Investors will seek advice on whether the European Central Bank will be willing to cut interest rates or not. Recently, the ECB may be satisfied only with data on the growth of household and corporate loans.
It is also worth paying attention to PMI readings, which usually did not significantly affect the markets, but after the last EUR/USD strong upward movement on May 23, just after the initial PMI reading for the US, it would be better to look at them, already on Monday.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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