Forex Economic Calendar Week Ahead: RBA, BOC, ECB Meetings; Canada & US Jobs Reports
06/02 TUESDAY | 04:30 GMT | AUD Reserve Bank of Australia Rate Decision
According to Australia overnight index swaps, there is a 42% chance of a 25-bps rate cut at the June RBA meeting. But given the commentary from RBA Governor Lowe suggests that the central bank is not prepared to move rates into negative territory, making any further rate cuts unlikely; the pricing may be a quirk due to the shape of the Australian bond yield curve.
To this end, the RBA has said that it will target the three-year bond yield at 0.25% - the same rate as the overnight cash rate – which is a reasonable assumption that the RBA will keeping its overnight cash rate at 0.25% or lower for at least the next three years. Like the RBNZ, lower rates may be coming soon for the RBA – just not quite yet.
Pairs to Watch: AUD/JPY, AUD/NZD, AUD/USD
06/03 WEDNESDAY | 14:00 GMT | CAD Bank of Canada Rate Decision
Ahead of the June BOC meeting, according to Canada overnight index swaps, rates markets think that the BOC is extremely unlikely to act at the forthcoming meet (4% chance of a 25-bps rate cut), even if more is being done to gear-up extraordinary policy efforts. Just two weeks ago, OIS were discounting a 55% chance of a 25-bps rate cut by December 2020; these odds now sit at 15%.
Pairs to Watch: EUR/CAD, CAD/JPY, USD/CAD
06/04 THURSDAY | 11:30 GMT | ECB European Central Bank Rate Decision
The June ECB meeting comes at an optimistic moment for the Euro, now that fiscal policymakers are pulling together plans for jointly-issued debt, a necessary step towards fiscal union – one of the Euro’s points of vulnerability since its inception. Accordingly, ECB President Largarde doesn’t need to deliver a “whatever it takes” moment in the vein of her predecessor; and moreover, any efforts taken at all (say, in the form of the rumored €500 billion asset purchase program) will further move the Euro away from the edge of an existential crisis. To this end, looser monetary policy from the ECB may not lead to a weaker Euro.
Pairs to Watch: EUR/CAD, CAD/JPY, USD/CAD
06/05 FRIDAY | 12:30 GMT | CAD Employment Change & Unemployment Rate (MAY)
The Canadian economy has seen a sharp pullback in its labor market, not dissimilar from other developed countries in the world, but certainly not as bad as its neighbor to the south. The May Canada jobs report offers some hope for the Canadian economy, insofar as the expected rate of job losses is due to be curtailed considerably: the Canadian labor market shed over 1.99 million jobs in April, but is only due to have lost another 500K in May (effectively a -75% drop in the rate of job losses). To this end, the May Canada unemployment rate is expected to tick higher, but relatively speaking, only modestly, from 13% to 15%. Such data may kindle hope that ‘the bottom’ is nearby for the Canadian economy.
Pairs to Watch: EUR/CAD, CAD/JPY, USD/CAD
06/05 FRIDAY | 12:30 GMT | USD Nonfarm Payrolls & Unemployment Rate (MAY)
The US economy has been hit hardest by the coronavirus pandemic, with now more than 40 million Americans having filed for unemployment benefits across the 50 states, per the most recent weekly jobless claims report. The forthcoming data remains harrowing, if no longer apocalyptic: a survey compiled by Bloomberg News forecasts 8.25M jobs were lost in May after the US economy shed 20.5 million jobs in April. To this end, the unemployment rate is expected to march higher still, from 14.7% to 19.7%.
Yet there is an argument to be made that these US jobs data won’t impact markets at all. Consider the reaction to the most recent US jobs report, where markets barely moved. This can be attributed to the fact that the weekly initial jobless claims figures can be used to, more or less, reverse engineer the monthly nonfarm payrolls figure (even by going so far as making the assumption that zero jobs have been added during the month).
Accordingly, instead of one massive US jobs report to look forward to each month, the market has since turned its attention to the weekly initial jobless claims, and now, the weekly continuing jobless claims, for a more frequent insight into the state of the US labor market.
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