The Week Ahead: Services PMIs, the US Jobs Report, and the ECB in Focus

The US Dollar

On Monday (June 3), the US ISM Manufacturing PMI will draw investor interest. A more marked contraction across the manufacturing sector could trigger fears of a US hard landing.

However, JOLTs Job Openings on Tuesday (June 4) and ADP nonfarm employment and ISM Services PMI figures on Wednesday (June 5) will likely impact the US dollar more.

Weaker labor market conditions and a more marked contraction across the services sector could raise bets on a September Fed rate cut.

Moreover, initial jobless claims also need consideration on Thursday (June 6).

However, on Friday (June 7), the US Jobs Report could be pivotal vis-à-vis the Fed rate path. A pickup in wage growth and a steady US unemployment rate could shift sentiment toward a September Fed rate cut.

There are no Fed speeches to consider. FOMC members entered the blackout period on Saturday (June 1).

The EUR

On Monday (June 3), Manufacturing PMIs will put the EUR/USD under the spotlight. Upward revisions to preliminary figures for Germany and the Eurozone could drive buyer demand for the EUR.

However, on Wednesday (June 5), Services PMIs will likely impact the EUR/USD more. As a contributor to inflation, the services sector remains a focal point for the ECB. Upward trends in wages and input prices could test investor bets on post-June ECB rate cuts.

German factory orders will draw investor interest on Thursday (June 6). However, the main event will be the ECB monetary policy decision and press conference.

The markets are betting on a 25-basis point rate cut. However, uncertainty lingers about post-June policy goals, putting the Lagarde press conference in focus. A hawkish ECB interest rate cut could fuel buyer demand for the EUR as sentiment toward the Eurozone economy improves.

On Friday (June 7), German industrial production and Eurozone GDP numbers complete a pivotal week for the EUR/USD.

The Pound

Finalized manufacturing and services sector PMIs could influence buyer demand for the Pound on Monday and Wednesday. Revisions to the S&P Global CIPS UK Services PMI may impact the GBP/USD more. The services sector accounts for over 70% of the UK economy.

The BRC Retail Sales Monitor (June 4) and house price data (June 7) will likely play second fiddle to the PMIs.

Beyond the numbers, investors should consider Bank of England chatter amidst increased uncertainty about a June BoE rate cut.

The Loonie

On Wednesday (June 5), the Bank of Canada and the Loonie are in the spotlight. Labor productivity numbers could support investor bets on multiple 2024 BoC rate cuts.

However, the BoC monetary policy decision will impact the Loonie more. The markets expect the BoC to cut interest rates by 25 basis points. Barring a surprise BoC policy decision, the focus will be on the press conference. Suggestions of more interest rate hikes could impact buyer demand for the Canadian dollar.

Trade data will draw investor interest on Thursday before employment numbers on Friday. The level of influence may hinge on the focal points highlighted during the BoC press conference.

The Australian Dollar

Company gross operating profits and finalized retail sales figures could impact buyer demand for the Aussie dollar  on Tuesday. A downward revision to preliminary retail sales numbers and a fall in company gross operating profits could refuel investor bets on a 2024 RBA rate cut.

However, GDP numbers will warrant investor attention on Wednesday before trade data on Thursday.

A hotter-than-expected Australian economy and improving trade terms could temper investor expectations of a 2024 RBA rate cut.

The Kiwi Dollar

Private sector PMI and trade data from China will influence buyer appetite for the NZD/USD. There are no economic indicators from New Zealand for investors to consider.

The Japanese Yen

On Monday, capital spending numbers for Q1 may influence the near-term trends for the Japanese Yen. A pickup in capital spending would signal an improving macroeconomic environment that could drive consumer confidence and spending. Upward trends in consumer spending may fuel demand-driven inflation and expectations of a 2024 Bank of Japan rate hike.

However, finalized services sector PMI numbers could impact the Japanese Yen more on Thursday. The Bank of Japan hopes the services sector and household spending will fuel demand-driven inflation and support a more hawkish BoJ rate path.

On Friday, household spending figures will warrant investor attention. After the spring wage negotiations, a rebound in spending would drive investor bets on a 2024 BoJ rate hike.

Beyond the numbers, investors should monitor BoJ chatter. Bank of Japan Board member Nakamura is on the calendar to speak on Thursday. Views on inflation, the weak Japanese Yen, and interest rates could move the dial.

Out of China

On Monday, the all-important Caixin Manufacturing PMI needs consideration. After the NBS PMI numbers, an unexpected fall in the PMI could impact market risk sentiment.

On Wednesday, the Caixin Services PMI also warrants investor attention before trade data on Friday.

A pickup in private sector activity and improving trade terms could be a boon for the commodity currencies, including the Aussie and the Kiwi dollars.