Week Ahead: Rate Decisions and Payrolls to Drive Volatility

By Tomasz Wisniewski|

Published: June 03 2024, 06:38 GMT+0

Week Ahead: Rate Decisions and Payrolls to Drive Volatility

Good morning, traders, and welcome to the first trading week of June! Today’s economic calendar is more active than usual for a Monday. We are expecting two significant data releases: the final Manufacturing PMI from the U.S., anticipated at 50.9, and the ISM Manufacturing PMI, projected to be slightly below 50 at 49.8. These figures will be critical in gauging the health of the U.S. manufacturing sector and could set the tone for market movements this week.

Reflecting on Friday’s market activity, the Core PCE Price Index from the U.S. matched expectations at 0.2%. This data point is highly influential for Federal Reserve policy decisions regarding interest rates and triggered notable market volatility. One of the standout reactions was a V-shaped recovery in major stock indices, suggesting potential for a new upward trend.

As we begin Monday, index futures are showing a positive outlook, flashing green across the board. On the currency front, there is notable strength in safe-haven currencies such as the Swiss franc, the U.S. dollar, and the Japanese yen. This indicates a cautious approach by investors despite the rally in stocks. Conversely, commodity-linked currencies, including the Australian dollar, New Zealand dollar, and Canadian dollar, are under pressure, likely due to declining commodity prices. Oil, along with precious metals like gold and silver, is experiencing downward trends, reflecting broader market caution.

This week is packed with significant events. On Wednesday, we expect the Bank of Canada to announce a surprising rate cut from 5.5% to 4.75%. Thursday will bring another critical interest rate decision from the European Central Bank, which is also anticipated to cut rates from 4.5% to 4.25%. The week will culminate on Friday with the release of the U.S. Non-Farm Payrolls report, projected at 185,000, alongside job data from Canada. These events are sure to inject substantial volatility into the markets.

In addition to these macroeconomic highlights, today we are still digesting the Core PCE Price Index’s impact, which will continue to influence trading sentiment. The strong moves in indices last week could set a precedent for continued bullish behavior if today’s data aligns with market expectations.

Source: https://www.axiory.com/analytics/market-news/week-ahead-rate-decisions-and-payrolls-to-drive-vo