USD
Existing home sales for the month of April came in at 5.19m vs 5.35 as expected.
The number came in weaker but it is still in the middle of this year’s range. New home sales also came in line expectations at 673k vs 675k as expected. Durable goods for the month of April came in at -2.1% vs 2% as expected with prior reading being revised down to 1.7%. Capital goods orders non-defence ex air (core) came in at -0.9% vs -0.3% as expected with previous reading being revised from 1% all the way down to 0.3%. A weak reading with very little to show for, with drop in core number particularly worrying.
The main message from FOMC May meeting was patience. The patient approach was characterized as appropriate for some time even if global conditions improved. Inflation was again characterized as transitory by many FED officials. Discussions about pros and cons of shortening bond portfolio maturity were held.
This week we will have data on consumer confidence, second estimate of Q1 GDP, goods trade balance, housing and inflation data.
Important news for USD:
Tuesday:
Consumer Confidence Index
Thursday:
GDP
Goods Trade Balance
Pending Home Sales
Friday:
PCE
Personal Spending
Personal Income
EUR
Preliminary PMI numbers for the month of May came in at 47.7 vs 48.1 as expected for manufacturing, 52.5 vs 53.0 as expected for services and 51.6 vs 51.7 as expected for composite. Drop in the manufacturing PMI was due to a drop in Germany’s reading, which stays deep in contraction, while French manufacturing PMI moved up to 50.6. Conditions in the EU remain stable but rebound recovery in Q2 is still missing according to these data. Preliminary consumer confidence for the month of May came in at -6.5 vs -7.7 as expected. Better than expected reading, still in the negatives but moving in the right direction. German Ifo business climate index continues to drop coming in at 97.9 vs 99.2 the previous month. Ifo economists state that German export dynamic is very weak. Consumption and construction are the main pillars of support.
This week we will have data on sentiment and confidence from EU and results or EU parliamentary elections will be announced. Additionally, Germany will publish employment and inflation data.
Important news for EUR:
Tuesday:
Economic Sentiment Indicator
Business Confidence
Wednesday:
Unemployment Change (Germany)
Unemployment Rate (Germany)
Friday:
CPI (Germany)
GBP
Inflation numbers for the month of April came in at 0.6% m/m vs 0.7% m/m as expected and 2.1% y/y vs 2.2% y/y as expected. Core CPI also came in a bit weaker than expected at 1.8% y/y vs 1.9% y/y as expected. All readings are higher than in March which can be attributed to seasonality, Easter holiday. ONS notes that energy bill prices were the biggest upwards driver of inflation in April. Inflation is still holding strong in the UK, however due to the Brexit uncertainties BOE will not be able to react. They will come out with hawkish statements on the back of inflation numbers and strong Labour market but a rate hike will not happen in the near-term. Retails sales for the same month came in at 0% m/m vs -0.3% m/m as expected. Consumption remains robust since the start of the year.
PM May is planned to include in withdrawal agreement bill requirement to vote on whether to hold a 2nd referendum, a vote on different customs arrangements with the EU and provide safeguards on the Northern Irish backstop as well as guarantees on workers’ rights and environmental protection. Leader of the Labour party Jeremy Corbyn stated that Labour cannot support new Brexit deal. Andrea Leadsom, leader of the House of Commons, resigned and in her statement said “I urge PM May to make the right decisions in interest of the country”. Then on Friday May 24 PM May announced that she will be stepping down as PM and leader of Conservative party on June 7. Nominations for new leader of the Conservative party will end in the week of June 10.
This week we will have data on consumer confidence as well as continuation of political saga as 1922 Committee reportedly said that they want May to stay in office while Tory leadership race takes place.
Important news for GBP:
Friday:
Consumer Confidence
AUD
RBA meeting minutes showed that rate cut would be appropriate if there are no further improvements in the labour market. It was reiterated that there is “no strong case” for a near-term move in policy. The board recognized that lower rates would have less of an impact than in the past. Later on, governor Lowe made a speech in which he stated that RBA is considering a rate cut in June since lower rates would support employment and help lift inflation toward the target. Dovish words by the governor signalling a shift in RBA’s stance. After the Governor’s speech, the odds of rate cut in June (June 4) are around 70%.
Construction work done in Q1 came in at -1.9% q/q vs 0% q/q as expected. The weakening of activity was relatively broadly based, across housing, public works and private infrastructure. This data set will be included in Q1 GDP that will be published on June 5 and it will drag it down.
This week we will have housing and Q1 capex data from Australia along with PMI data from China.
Important news for AUD:
Thursday:
Building Approvals
Private Capital Expenditures
Friday:
Manufacturing PMI (China)
Non-Manufacturing PMI (China)
NZD
After rise in manufacturing PMI we have a drop in services PMI for the month of April as the reading came at 51.8 vs 52.3 the previous month, revised lower from 52.9. This is the third consecutive drop in the reading, now falling to the lowest since September of 2012. Activity/sales index and employment index, which is in contraction, dropped to the lowest since 2012. Retail sales excluding inflation for the Q1 of 2019 came in at 0.7% q/q vs 0.6% q/q as expected. Trade balance for the month of April came in at NZD433m vs NZD450m as expected. Lower than expected surplus was achieved on both beats in exports and in imports so it will be welcomed. Demand for products from New Zealand, mainly dairy, is still present around the Globe and domestic demand is still going strong.
This week we will have financial stability report along with housing data and budget release.
Important news for NZD:
Tuesday:
RBNZ Financial Stability Report
Thursday:
Building Consents
Budget Release
CAD
Retail Sales for the month of March came in at 1.1% m/m vs 1.2% m/m as expected. Ex-auto category (core) has beaten the expectations by wide margin coming in at 1.7% m/m vs 0.9% m/m. Both headline and ex-auto numbers for the previous month have been revised higher. Sales rose in 7 out of 11 sectors. The largest contributor were gasoline stations with 0.64% while the largest contributor on the downside was new-car dealers -0.46%. Positive revisions gave CAD a boost pushing it up across the markets. Wholesale trade for the same month came in at 1.4% m/m vs 0.9% m/m as expected increasing for the fourth consecutive month and by fastest pace in two years. Wholesale trade rose in 6 out of 7 sectors with motor vehicles being the only one that declined. Prior month was revised lower to 0.2% m/m from 0.3% m/m and that eased the positive impact of this reading.
This week we will have GDP figures, monthly for March and quarterly for Q1 and all-important BOC interest decision. It is widely expected that BOC will keep rates on hold. After a strong jobs report and retail sales we can expect a change in the tone to more hawkish one.
Important news for CAD:
Wednesday:
BOC Interest Rate Decision
Friday:
GDP (monthly and quarterly)
JPY
Preliminary Q1 GDP came in at 0.5% q/q vs -0.1% q/q as expected and 2.1% y/y vs -0.2% y/y as expected. This is an unexpectedly huge beat. Digging deeper into the GDP numbers we find some troubling signs. Both consumer and business spending, capex, were down and the headline number was accomplished due to net positives from the trade, rising inventories and government spending, similarly to US Q1 GDP. Gains from trade are not sustainable and they were achieved with both a drop in exports -2.4% q/q and a drop in imports -4.6% q/q.
Trade balance for the month of April came in at JPY60.4bn vs JPY232.7bn as expected. Exports were a huge miss, coming in at -2.4% y/y vs -1.6% y/y as expected showing that trade wars take their toll on the Japanese exporters. This is the fifth consecutive month of falling exports. Imports came in at 6.4% y/y vs 4.5% y/y as expected demonstrating robust domestic demand.
Preliminary manufacturing PMI for the month of May came in at 49.6 vs 50.2 the previous month. Back into contraction territory. Outlook and new export orders fell at a faster rate dragging the number down. New export orders fell at the sharpest rate in four months. The continuation of US-China trade war increases concerns among Japanese goods producers which in turn reflects in the reading.
National inflation for the same month came in at 0.9% y/y as expected up from the 0.5% y/y the previous month. Core CPI excluding fresh food and energy came in at 0.6% y/y as expected from 0.4% y/y the previous month. Small movements in the right direction toward the 2% inflation target. Still a long way from there but at least on the right track.
This week we will have speech from governor Kuroda as well as inflation data for Tokyo area for the month of May, employment data, retail sales data and preliminary industrial production data for the month of April.
Important news for JPY:
Monday:
BOJ Governor Kuroda Speech
Friday:
Tokyo CPI
Unemployment Rate
Jobs to Applicants Ratio
Retail Sales
Industrial Production
CHF
SNB’s board member Moser reiterated that the central bank will intervene if it considers it to be appropriate. Q1 industrial output surprised with a huge beat coming in at 4.3% y/y vs -0.3% y/y as expected.
This week we will have employment data and Q1 GDP data as well as trade balance and consumption data.
Important news for CHF:
Monday:
Employment Level
Tuesday:
GDP
Trade Balance
Exports
Imports
Friday:
Retail Sales
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