★★★
May 21-25: Events to watch ★★★
Monday, May 21, 2012 - 06:45
•
Canada: bank holiday (Victoria Day). The day is practically empty of important economic events. As a result, traders get ready for tomorrow with the Bank of Japan in focus.
Tuesday, May 22:
•
New Zealand: the release of inflation expectations data (Q1), a leading indicator of economic sentiment.
•
Great Britain: Consumer Price Index (CPI) in April is forecasted to grow by 3.1% (a decline in comparison with a 3.5% growth in March, but still much higher, than a 2% BoE target). It’s possible, however, that the rate falls to 3% (the lowest since February 2010) saving the BoE Governor Sir Mervyn King from issuing the inflation letter (the letter is only required if the inflation is below 1% or above 3% and is written to explain why inflation has overshot the target). Public sector net borrowing in April may decline to minus 5.4B vs. 15.9B in March.
•
U.S.: Annualized number of existing home sales – the main gauge of housing market conditions – may increase from 4.48M in March to 4.65M in April supporting the idea of the nation’s economic rebound. The labor market is America’s weakest spot and many investors go the US nowadays only because it’s better than Europe.
•
Europe: consumer confidence in the euro area will likely remain low. Don’t wait for any surprises here. Spain will sell 3- and 6-month bills.
•
The OECD (Organization of Economic Cooperation and Development) will release its global growth forecast.
Wednesday, May 23:
•
Japan: Trade deficit is expected to decline slightly to from 0.62T in March to 0.60T in April. Positive trade balance report may support yen ahead of the BOJ announcement. The markets will be eyeing the Bank of Japan’s meeting. The benchmark rate is seen unchanged at 0.10% level, though the central bank may be forced to do more easing. If it doesn’t – well, yen will surely strengthen. For more details see our special article.
•
Europe: Leaders of the EU 27 member states will assemble in Brussels for a crisis meeting. New French President François Hollande will try to push the currency union from austerity to growth promotion and make Germany agree to the euro bonds – debt issued for the euro zone as a whole.
•
Great Britain: MPC meeting minutes. According to the forecasts, the MPC officials have voted unanimously to keep the monetary policy unchanged. Retail sales in April are forecasted to decline by 0.5% vs. a 1.8% growth in March – that would be a very bad sign indicating that the condition of the recessed UK economy aren’t improving at all.
•
Canada: Core retail sales in March may grow by 0.6% compared with a 0.5% increase in February. The nation’s economy for now seems stable enough.
•
U.S.: New home sales are also expected to increase to 336K in April vs. 328K in March.
Thursday, May 24:
•
New Zealand: April trade balance is to be released (134M trade surplus in March), while the government will make its annual budget statement.
•
China: May HSBC flash manufacturing PMI will be released (in April the index reached 49.3, indicating the industry contraction).
•
Euro zone: According to forecasts, French flash manufacturing and services PMIs in May are likely to increase to 47.1 and 45.9 respectively (however, the reading below 50.0 still indicates industry contraction). German flash manufacturing PMI is forecasted to reach 47.2, while the services one – to decline to 51.9 from 52.2. Euro zone’s flash purchasing managers’ surveys are expected to show a 10th successive monthly decline in manufacturing output (46.1) and a fourth successive fall in services (47.2). German Ifo business climate in May is expected to go down to 109.5 from 109.9 in April, indicating that concerns of entrepreneurs have risen on the back of the extending crisis. Later in the day, ECB president Mario Draghi is to speak; his comments will be closely watched for any indication of the future possible direction of monetary policy.
•
Great Britain: Britain’s revised GDP in is expected to confirm that the economy shrank 0.2% in Q4 after having declined by 0.3% in Q4 2011. The release of a preliminary GDP showed that UK is in a technical recession – a second consecutive quarterly decline. If the final GDP remains unchanged, the downward pressure on the sterling will grow. New QE is becoming more and more likely; last week a dovish inflation report was issued. The BoE Governor Mervin King sounds rather pessimistic: according to him, the euro zone is tearing itself apart.
•
U.S.: Core durable goods orders in April may increase by 1.3% vs. a 0.8% fall in March. Number of weekly unemployment claims is forecasted to reach 374K after the previous reading 370K
Friday, May 25:
•
Japan: Tokyo Core CPI is forecasted to decline by 0.5% in May, while national – to grow by 0.1%.
•
Euro zone: GfK German consumer climate, which is an important indicator of consumer spending, may increase to 5.8 in May from 5.6 in April.
