Highlights
On the policy front this week, easing inflation and slower economic activity may prompt the Bank of Canada on Wednesday to conduct its first rate cut during the current cycle, lowering its policy rate by 25 basis points from the current restrictive level of 5 percent. Some forecasters expect the bank to wait for another month to assess more data. The possibility of a June rate cut by the European Central Bank appears to be more certain. The ECB is widely expected on Thursday to cut its key interest rates by 25 basis points, lowering the refi rate to 4.25 percent.
The focus is also on Friday's US nonfarm payroll data, which is forecast to show a larger 195,000 increase in May versus April's 175,000 while the pace of second quarter job growth is seen well below the first-quarter's monthly average of 269,000, indicating cooling of the labor market.
On Monday, the final US manufacturing PMI for May is expected to come in at 50.9, unchanged from the mid-month flash and 9 tenths above April.
US manufacturing activity index compiled by the Institute for Supply Management (ISM) is forecast to edge up to 49.8 in May after slumping 1.1 percentage points to 49.2 in April but that would be still below the neutral line of 50. The key index slipped back into contraction in April after posting the first expansion in 17 months in March, hit by a disappointing decline in new orders and a renewed surge in raw materials costs while employment conditions continued improving toward growth.
Construction spending is expected to increase 0.2 percent on the month in April versus March's 0.2 percent decline that saw a sharp fall in residential spending.
In Asia, South Korea's annual inflation rate is expected to ease only slightly to 2.8 percent in May from 2.9 percent in April. The year-over-year increase in consumer prices has been slowing gradually but it is still above the Bank of Korea's 2 percent target. The CPI is seen up 0.2 percent on the month after being flat the previous month.
The focus is also on Friday's US nonfarm payroll data, which is forecast to show a larger 195,000 increase in May versus April's 175,000 while the pace of second quarter job growth is seen well below the first-quarter's monthly average of 269,000, indicating cooling of the labor market.
On Monday, the final US manufacturing PMI for May is expected to come in at 50.9, unchanged from the mid-month flash and 9 tenths above April.
US manufacturing activity index compiled by the Institute for Supply Management (ISM) is forecast to edge up to 49.8 in May after slumping 1.1 percentage points to 49.2 in April but that would be still below the neutral line of 50. The key index slipped back into contraction in April after posting the first expansion in 17 months in March, hit by a disappointing decline in new orders and a renewed surge in raw materials costs while employment conditions continued improving toward growth.
Construction spending is expected to increase 0.2 percent on the month in April versus March's 0.2 percent decline that saw a sharp fall in residential spending.
In Asia, South Korea's annual inflation rate is expected to ease only slightly to 2.8 percent in May from 2.9 percent in April. The year-over-year increase in consumer prices has been slowing gradually but it is still above the Bank of Korea's 2 percent target. The CPI is seen up 0.2 percent on the month after being flat the previous month.
Definition
Market Focus details key factors in the coming day that will impact the economic outlook and the financial markets. These include central bank events, economic indicators, policymaker speeches as well as expected political and corporate developments.
Description
Keeping up-to-date with event schedules and the economic calendar is key to understanding the global financial system. Econoday's Market Focus allows investors and policymakers to carefully track what will be making news and moving the financial markets in the coming day.
