Tuesday brings the release of monetary policy meeting minutes in Australia, inflation data in Switzerland and economic indicators from the eurozone. In the U.S., attention will turn to the JOLTS job openings report.
Thursday’s focus will shift to the European Central Bank’s monetary policy announcement. In the U.S., weekly unemployment claims data will be released. To end the week, Friday will be packed with key labor market data from the U.S., including average hourly earnings, the non-farm employment change, and the unemployment rate. Canada will also release its employment change and unemployment rate.
In the U.S., the consensus for the ISM manufacturing PMI is 49.3 vs. 48.7 previously. Following the recent decline in the manufacturing sector, a modest improvement is expected in this week’s data. However, the overall outlook remains weak, as ongoing uncertainty around tariffs continues to weigh on sentiment and activity.
In Switzerland, the consensus for the CPI m/m is 0.2%, compared to the prior reading of 0.0%.
With markets already anticipating a 25 bps rate cut in June, soft CPI and Q1 GDP prints could solidify that expectation, Wells Fargo analysts said.
Although some analysts argue that the BoC may resume rate cuts, recent data has been mixed. Supporting the case for further easing are signs of softening in labor market conditions and a cooling housing market, according to analysts from RBC.
Overall, the Bank is expected to keep the door open for further easing. With inflation showing renewed signs of progress toward the 2% target and external headwinds such as tariff pressures weighing on growth, the BoC is likely to resume rate cuts in July and October, with two additional 25 bps reductions anticipated by Wells Fargo analysts.
That said, the index still includes sectors connected to goods such as construction and transportation alongside traditional service industries like healthcare and finance. With trade tensions easing somewhat over the past month, analysts at Wells Fargo anticipate a modest improvement in the services index.
At this week's meeting, the ECB is expected to deliver a 25 bps rate cut, bringing the deposit rate down to 2.00%.
While inflation has not yet sustainably returned to the 2% target, the outlook suggests a gradual economic slowdown rather than a sharp downturn. With policy rates approaching a neutral level, the ECB’s rate-cutting cycle is expected to conclude by the third quarter.
In the U.S., the consensus for average hourly earnings m/m is 0.3% vs. the prior 0.2%. The non-farm employment change is expected at 130K compared to the previous 177K, while the unemployment rate is projected to remain unchanged at 4.2%.
Employment indicators from PMI surveys continue to suggest potential contraction. Given that May typically sees strong hiring, the current softness may be further magnified by seasonal expectations. Companies are exercising caution not only in new hiring but also in staff retention. However, with layoffs still relatively subdued, a sharp drop in net employment is unlikely.
The previous employment change in Canada was 7.4K and the unemployment rate stood at 6.9%. Labor market weakness remains a key concern ahead of Friday’s May employment report.
In April, there was a sharp loss of 30,600 manufacturing jobs which represented the worst decline since the pandemic and pushed the unemployment rate up from 6.6% in Q1 to 6.9%. While May’s figures are expected to show flat employment and a steady jobless rate, continued softness in the industrial sector could strengthen expectations for BoC rate cuts later this year, particularly if hiring fails to recover.
This article was written by Gina Constantin at www.forexlive.com. Read More Details
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