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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Ahead of the game: May 29, 2023

Your weekly financial calendar for market insights and key economic indicators.

Source: Bloomberg

Reading time: 3 min 50 sec

THIS WEEK'S FRESH CYCLE HIGHS FOR THE NASDAQ, courtesy of Nvidia’s earnings report, saw its share price close 24.73% higher at $379.80, adding ~US$200 billion to the company's market capitalisation.

While Nvidia earnings euphoria helped some equity markets look past the alarming headlines "UNITED STATES AAA RATING MAY BE CUT BY FITCH", there was no escape for bond bulls as yields on the US 2-year Treasury Note gained for a tenth consecutive session.

Resilient economic data and hawkish overtones from Fed speakers also supported the rise in US yields. The rates market is now pricing in a 50% chance of a 25bp rate hike at the June FOMC.

The US dollar was a big beneficiary of the rise in US yields and the risk aversion flows that have followed the debt ceiling drama. The Aussie dollar was one of the big losers as it fell below .6500c for the first time in seven months.

Next week the key events will be the Australian CPI Monthly indicator, China’s PMIs, inflation data in Europe and a critical jobs report in the US. Continue to keep an eye out also for more headlines around US debt ceiling negotiations.

  • US equity markets whipped around by debt ceiling negotiations
  • FOMC meeting minutes showed divided officials on US interest rates
  • Fitch placed US AAA rating on Rating Watch Negative amid stalled debt ceiling negotiations
  • US Treasury Secretary reaffirmed early June deadline for possible default
  • Yields on US 2-year Treasury note rose for tenth consecutive session, 50% chance of rate hike in June
  • UK inflation surprised to the upside, defying expectations
  • Nvidia's strong earnings beat and guidance led to share price surge
  • RBNZ raised rates as expected, accompanied by dovish commentary
  • Iron ore price fell to a six-month low
  • AUD/USD dropped to a seven-month low
  • Gold fell for a third straight week
  • Copper futures hit a six-month low
  • Volatility (VIX) index surged on Wall Street.

  • NZ: Building Permits (Tuesday, May 30 at 8:45 am AEST)
  • AU: Building Approvals (Tuesday, May 30 at 11:30 am AEST)
  • NZ: ANZ Business Confidence (Wednesday, May 31 at 11:00 am AEST)
  • AU: Monthly CPI Indicator (Wednesday, May 31 at 11:30 am AEST)
  • AU: Core Logic House Price (Wednesday, May 31 at 11:30 am AEST)
  • AU: Private Capex (Thursday, June 1 at 11:30 am AEST)
  • AU: Home Loans (Friday, June 2 at 11:30 am AEST)

  • JP: Retail Sales (Wednesday, May 31, 9:50 am AEST)
  • CN: NBS PMIs (Wednesday, May 31, 11:30 am AEST)
  • JP: Consumer Confidence (Wednesday, May 31, 3:00 pm AEST)
  • CN: Caixin PMIs (Thursday, June 1, 11:45 am AEST)

  • US: CB Consumer Confidence (Wednesday, May 31 at 12:00 am AEST)
  • US: Chicago PMI (Wednesday, May 31 at 11:45 pm AEST)
  • US: JOLTS Job Openings (Thursday, June 1 at 12:00 am AEST)
  • US: ADP Employment (Thursday, June 1 at 10:15 pm AEST)
  • US: ISM Manufacturing PMI (Friday, June 2 at 12:00 am AEST)
  • US: Non-Farm Payrolls (Friday, June 2 at 10:30 pm AEST)

  • GE: Inflation (Wednesday, May 31 at 10:00 pm AEST)
  • EA: Inflation (Thursday, June 1 at 7:00 pm AEST)

Source: Bloomberg

Break down

  • Australia

Monthly CPI indicator

Wednesday, May 31 at 11.30 am AEST

Earlier this month, the RBA surprised the market and raised the cash rate by 25bp to 3.85%. The RBA warned that it could again lift rates in June, but it would depend on how the economy and inflation evolved.

Wages and employment data have since come in weaker than expected. Retail Sales for April were also subdued and attention now turns to the release of the Monthly CPI indicator.

In March, the monthly CPI indicator rose by 6.3% YoY, falling from 6.8% in February. It was the third month in a row the indicator fell, extending its decline from a peak of 8.4% in December. The softer print in March was mainly due to a softer pace in the growth in housing and transport prices.

In April, the monthly CPI indicator is expected to rise by 6.3%, unchanged from March - an inline or softer-than-expected number would provide another reason for the RBA to move the sidelines (again) in June.

ABS Monthly CPI indicator chart

Source: ABS
  • Euro Area

Inflation

Thursday, June 1 at 7.00 pm AEST

In April, the Euro Area headline inflation rose by 7%, ticking higher from 6.9% in March, thereby ending five months of falls from the 10.6% peak in October. Rising service and energy costs offset a fall in food price growth. Core inflation edged lower to 5.6% from 5.7% in March.

In May, headline inflation is expected to fall to 6.2% from 7%, driven by a decline in energy bills, fuel costs and food prices. Core inflation is expected to fall to 5.4% from 5.6%.

Nonetheless, inflation remains well above the ECB's 2% target, and after raising the deposit rate by 3.75%, the market is pricing in two more 25bp rate hikes taking the ECB’s terminal rate to 3.75%

EA Headline inflation chart

Source: TradingEconomics

  • US

Non-Farm Payrolls

Friday, June 2 at 10.30 pm AEST

While European and China data has recently sparked slow-down fears, US economic data has proved resilient. Hawkish overtones from numerous Fed speakers, including Bullard, Mester, Kashkari, Logan and Bowman, have increased the chances that the Fed will hike rates at the June FOMC meeting.

Crucial to this will be the upcoming Non-Farm payrolls report. The market is expecting payrolls to rise by 180k in May, slowing from 253k in April. The unemployment rate is expected to tick higher to 3.5% from 3.4% in April. The participation rate is expected to remain unchanged at 62.6%.

Average hourly earnings are expected to rise by 0.3% m/m, which would see the annual rate fall to 4.3% from 4.4% in April.

US Unemployment rate chart

Source: TradingEconomics

Economics calendar

All times shown in AEST (UTC+10) unless otherwise stated

Source: DailyFX
Source: DailyFX
Source: DailyFX
Source: DailyFX
Source: DailyFX

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