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There’s a busy week ahead full of economic events to watch for. Today, markets will monitor the manufacturing PMI figures from the eurozone, the U.K., and the U.S. Additionally, Fed Chair Jerome Powell is expected to speak at the Federal Reserve Board of Governors International Finance Division’s 75th Anniversary Conference in Washington, D.C.
Tuesday brings the release of monetary policy meeting minutes in Australia, inflation data in Switzerland and economic indicators from the eurozone. In the U.S., attention will turn to the JOLTS job openings report.
On Wednesday, Australia will publish its quarterly GDP figures, while in the U.S., investors will look for the ADP non-farm employment change. The Bank of Canada will take center stage with its monetary policy announcement, and the U.S. will release the ISM Services PMI.
Thursday’s focus will shift to the European Central Bank’s monetary policy announcement. In the U.S., weekly unemployment claims data will be released. To end the week, Friday will be packed with key labor market data from the U.S., including average hourly earnings, the non-farm employment change, and the unemployment rate. Canada will also release its employment change and unemployment rate.
Throughout the week, several FOMC members are expected to deliver remarks, which may offer further insight into the Fed’s policy outlook.
In the U.S., the consensus for the ISM manufacturing PMI is 49.3 vs. 48.7 previously. Following the recent decline in the manufacturing sector, a modest improvement is expected in this week’s data. However, the overall outlook remains weak, as ongoing uncertainty around tariffs continues to weigh on sentiment and activity.
The anticipated improvement can largely be attributed to a temporary pause on some China-related tariffs, which has eased trade tensions slightly. Still, the ISM manufacturing index is expected to remain in contractionary territory, though with less downward pressure than in the previous month.
In Switzerland, the consensus for the CPI m/m is 0.2%, compared to the prior reading of 0.0%.
Swiss CPI data is expected to show a further slowdown, with headline inflation projected to dip by 0.1% y/y and core figures also easing. The headline inflation has been trending lower for the past two years, and April’s flat reading puts it on the verge of falling below the Swiss National Bank’s 0-2% target range.
With markets already anticipating a 25 bps rate cut in June, soft CPI and Q1 GDP prints could solidify that expectation, Wells Fargo analysts said.
At this week’s meeting, the BoC is widely expected to keep rates on hold. As a reminder, the Bank paused its easing cycle at the last meeting after a rapid series of cuts totaling 225 bps over the past year.
Although some analysts argue that the BoC may resume rate cuts, recent data has been mixed. Supporting the case for further easing are signs of softening in labor market conditions and a cooling housing market, according to analysts from RBC.
Consumer spending has held up better than expected, despite weaker sentiment indicators. Inflation surprised slightly to the upside in April, driven mainly by domestic service costs rather than tariff effects. With key data, including May jobs and trade figures, set to be released after the rate decision, the BoC is likely to adopt a cautious stance for now, opting to reassess once more information becomes available.
Overall, the Bank is expected to keep the door open for further easing. With inflation showing renewed signs of progress toward the 2% target and external headwinds such as tariff pressures weighing on growth, the BoC is likely to resume rate cuts in July and October, with two additional 25 bps reductions anticipated by Wells Fargo analysts.
In the U.S., the consensus for the ISM services PMI is 52.0 vs. the prior 51.6. Compared to the manufacturing sector, the ISM services index has managed to stay in expansionary territory, largely because it is less directly affected by tariff-related disruptions.
That said, the index still includes sectors connected to goods such as construction and transportation alongside traditional service industries like healthcare and finance. With trade tensions easing somewhat over the past month, analysts at Wells Fargo anticipate a modest improvement in the services index.
They also noted that although not included in the headline figure, the “prices paid” component will be closely watched as an indicator of inflationary pressure. Regional Federal Reserve surveys point to a slower rise in input costs recently, yet a significant number of firms continue to report elevated expenses suggesting that the recent downward trend in consumer price inflation may be approaching a turning point.
At this week’s meeting, the ECB is expected to deliver a 25 bps rate cut, bringing the deposit rate down to 2.00%.
Although recent Eurozone data have painted a mixed picture, easing inflationary pressures and ongoing global uncertainties are likely motivating the ECB to lower rates further in an effort to support growth.
While inflation has not yet sustainably returned to the 2% target, the outlook suggests a gradual economic slowdown rather than a sharp downturn. With policy rates approaching a neutral level, the ECB’s rate-cutting cycle is expected to conclude by the third quarter.
Markets currently anticipate additional 25 bps cuts in both June and September, which would bring the deposit rate down to 1.75%.
In the U.S., the consensus for average hourly earnings m/m is 0.3% vs. the prior 0.2%. The non-farm employment change is expected at 130K compared to the previous 177K, while the unemployment rate is projected to remain unchanged at 4.2%.
Analysts from Wells Fargo noted that the report will capture hiring activity in the initial weeks following the “Liberation Day” tariff announcement and will reflect broader hiring trends amid growing concerns over economic policy. They also pointed out that job postings on Indeed.com have dropped to their lowest levels since 2020, and small business hiring intentions are near cyclical lows.
Employment indicators from PMI surveys continue to suggest potential contraction. Given that May typically sees strong hiring, the current softness may be further magnified by seasonal expectations. Companies are exercising caution not only in new hiring but also in staff retention. However, with layoffs still relatively subdued, a sharp drop in net employment is unlikely.
Overall, labor market conditions are cooling, but the unemployment rate is expected to remain steady at around 4.2% through May.
The previous employment change in Canada was 7.4K and the unemployment rate stood at 6.9%. Labor market weakness remains a key concern ahead of Friday’s May employment report.
In April, there was a sharp loss of 30,600 manufacturing jobs which represented the worst decline since the pandemic and pushed the unemployment rate up from 6.6% in Q1 to 6.9%. While May’s figures are expected to show flat employment and a steady jobless rate, continued softness in the industrial sector could strengthen expectations for BoC rate cuts later this year, particularly if hiring fails to recover.
This article was written by Gina Constantin at www.forexlive.com.
CNBC is reporting that Trump and Xi are to speak this week, but not today.
Trump accused China of violating the trade agreement reached in May that lowered tariffs from 145% to 35%.
In early April 2025, China imposed export restrictions on seven heavy rare earth metals and rare earth magnets, citing national security concerns. These measures require exporters to obtain licenses, effectively reducing shipments to the U.S. and other countries. The U.S. government has accused China of violating a recent trade agreement by continiing to withhold these essential materials, leading to heightened tensions between the two nations (and the potential for more inflation.
Trump issued a terse statement/warning to China last week.
This is not over and is a threat to inflation.
This article was written by Greg Michalowski at www.forexlive.com.
📈 Sector Overview
Today’s stock market heatmap reveals a dynamic yet volatile landscape, with technology stocks experiencing notable declines while the healthcare sector exhibits significant resilience.
🚀 Semiconductors Lead Tech Decline
The technology sector, driven heavily by semiconductors, shows mixed results. Although Nvidia (NVDA) rose by 1.06%, others like Oracle (ORCL) and Palantir (PLTR) dropped by over 1%. In semiconductors, AVGO surged by 2.79%, buoying the sector slightly.
🩺 Healthcare Shines
In contrast, healthcare stocks like UnitedHealth Group (UNH) have made robust gains with an increase of 1.27%. Meanwhile, Eli Lilly (LLY) remains steady.
🏦 Mixed Performance in Financials
Financial sector stocks present a mixed picture. Noteworthy is the decline of Visa (V) by 1.02% amidst broader sector volatility. Some gains were seen with JPMorgan Chase (JPM) modestly declining by 0.33%.
😟 Consumer Discretionary Under Pressure
The consumer discretionary sector, featuring giants like Amazon (AMZN) and Tesla (TSLA), are facing pressure, with TSLA falling sharply by 2.41%, highlighting investor caution.
📚 Market Mood and Trends
Overall, investor sentiment appears cautious amidst economic uncertainties, reflected in the mixed performance across sectors. The tech sector’s struggles underscore potential market corrections, while health stocks shine as a safer bet in a volatile environment.
💡 Strategic Recommendations
Given the current trends, investors should consider the following strategies:
Stay informed with real-time updates and diverse portfolios to navigate today’s volatile market dynamics. For further insights, keep an eye on ForexLive.com.
This article was written by Itai Levitan at www.forexlive.com.
Dallas Fed Pres. Lorrie Logan:
Logan’s bias appears cautiously neutral (risks both sides) with a fear toward inflation risks rising.
She emphasizes patience in current policy, reflecting confidence in the economy’s resilience. However, her concern about inflation expectations becoming entrenched—especially due to tariffs—signals vigilance and a willingness to act IF inflation risks intensify. It is a big IF, but she is not in any hurry.
Earlier today, Fed Governor Christopher Waller was a bit more dovish. He said rate cuts remain possible later this year if inflation continues to ease and tariffs stay modest. He expects tariffs to cause a one-time price rise—not persistent inflation—and believes the Fed can look through that impact. Still, uncertainty around trade policy poses risks, with tariffs likely to be the main inflation driver in 2025 and potentially increasing unemployment, especially in the second half of the year.
Waller sees the Fed as close to its inflation target and stresses that policy should focus on real economic activity when inflation is near goal. He doubts a 10% tariff would push inflation to 3% and downplays concerns from consumer surveys, noting workers lack the leverage to demand higher wages in the current job market.
He also attributed rising long-term yields to fiscal concerns and foreign buyer anxiety but said there’s no issue with bond market functioning. Overall, Waller remains attentive to inflation forecasts and sees no signs of the pandemic-era inflation dynamics returning.
This article was written by Greg Michalowski at www.forexlive.com.
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