The Week Ahead

During the week ahead the market is likely to look towards a number of key market themes and events which have the potential to indicate financial market moves.

The economic calendar is jammed packed with important events and releases this week. The release of the US monthly jobs report and EU CPI will be the main focus.

Euro area flash CPI

The Euro Area’s consumer price inflation was confirmed at 7.0 percent in April 2023, slightly higher than the previous month’s 13-month low of 6.9 percent.

The rate remained significantly above the European Central Bank’s target of 2.0 percent, indicating that policymakers will likely continue their efforts to curb inflationary pressures. 

This week’s upcoming flash CPI reading for May could make life easier for the ECB as inflation is speak to tick-down annual. That could raise the prospects of a more dovish ECB meeting in June.

The fall in energy prices over recent months has sent headline inflation in Europe sharply lower. Having peaked at 10.6% in October, euro area inflation, as measured by its consumer price index (CPI), eased to 6.9% in March. It then ticked back up to 7% in April.

It should be noted that few economists believe the ECB will continue to raise rates if the US Federal Reserve holds off on a rate rise in June.

US non-farm payrolls

The Bureau of Labour Statistics’ jobs report for the month of May is expected to show that 180,000 jobs were added while the unemployment rate edged up to 3.5%.

The US economy unexpectedly added 253,000 jobs in April 2023, beating forecasts of 180,000 and following a downwardly revised 165,000 in March.

The April number largely exceeds the 70,000 to 100,000 monthly job gain needed to keep up with growth in the working-age population and compares with the average monthly gain of 290,000 over the prior 6 months.