Wonderful Introduction:
A quiet path will always arouse a relaxed yearning in twists and turns; a huge wave, the thrilling sound can be even more stacked when the tide rises and falls; a story, only with regrets and sorrows can bring about a heart-wrenching desolation; a life, where the ups and downs show the stunning heroism.
Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: Five major events that will happen in the global market this week". Hope it will be helpful to you! The original content is as follows:
Sell in May and leave? For those who stay, there are many factors that trigger high volatility, from ongoing trade dynamics to decisions by the European Central Bank (ECB) to non-farm employment data (NFP).
1) Suspicion of future trade agreements has gradually emerged
Two months have passed since "Liberation Day", and time is heading towards July 9, when US President Donald Trump's stricter "peer tariffs" will take effect. So far, only one trade agreement has been signed with the UK—a deal that lasted three years and is considered the easiest.
In other areas, suspicion also dominates. The recent U.S. Court of International Trade rulings held that most tariffs were illegal and were overreached by the White House, which undoubtedly shook countries' willingness to make concessions.
These tariffs remain in effect and the ruling is underway in the legal system. However, if Trump cannot truly deliver on his threat, there is no reason for the EU to relax regulation, or any other partner concessions.
The biggest trade relationship is China-US relations. Both sides agreed to reduce extreme tariffs of more than 100%, but most Chinese imports still require 30% tariffs. In addition, Trump has recently expressed anger at Beijing's alleged violations of these agreements, which were signed only three weeks ago.
If the United States and India reach an agreement—reportedly close to reaching—the market will rebound. Any other agreement will be good news. However, the possibility of futile running-in is higher.
2) ISM manufacturing PMI may rebound due to tariff easing expectations
Monday, Beijing time 22:00. The Institute of Supply Management (ISM) will release its industrial sector’s Purchasing Managers Index (PMI) earlier this week as the first tip for Friday’s employment report. It is expected to be optimistic.
The expectations for May are to improve 48.7 points in April. There are many reasons for optimism, namely the delay in tariff policies. If the score exceeds 50, it means that the economy will shift from contraction to expansion and the market will cheer.
The employment hejiba.cnponent is crucial to Friday’s non-farm employment data, while the payment price indicator provides guidance on inflation expectations.
3) JOLTs may continue to decline
Tuesday, 22:00 Beijing time. JOLTs job opening reports are a lagging indicator – the data is for April, not May, like non-farm employment data. However, the Federal Reserve (Fed) attaches special importance to this, giving it additional importance.
JOLTs have been declining in recent months, falling to an annualized 7.19 million in March. This is the lowest level in four years. It is expected to decline again, reflecting the reduction in jobs provided as the economy gradually slows down.
In the report, the number of resignations is a concern - people voluntarily leave when they feel confident and unwilling to change when they feel worried.
4) The impact of ADP is short-lived, but it affects NFP expectations
Wednesday, Beijing time 20:15. Automatic Data Processing Corporation (ADP) is the largest payroll provider in the U.S., which is responsible for about one-sixth of the nation’s payroll. Its private sector employment data are often not highly correlated with official non-farm employment data (NFP), but tend to trigger rapid responses in the market.
In addition, the published data will also affect expectations for Friday releases. ADP data shows that April was 62K, almost half the expected one, and is expected to rebound to more than 100K in May.
5) The ISM Service Industry Purchasing Managers Index may continue its uptrend after avoiding a contraction
Wednesday, 22:00 Beijing time. The service industry is the largest industry in the United States, and if it were a country, it would be the third largest economy in the world. ISM's forward-looking indicators for the industry rebounded unexpectedly to 51.6 points in April, showing that the impact of peer tariff delays exceeded concerns about it.
The April report may be better, showing corporate optimism about lifting punitive tariffs on Chinese goods. The latest court ruling may have been made after the investigation was concluded, ruling that most tariffs were invalid.
Employment hejiba.cnponents affect expectations of non-farm employment data, but the overall data is equally important - the ISM Services Purchasing Manager Index is the top indicator.
6) The European Central Bank is expected to cut interest rates for the seventh consecutive time
On Thursday, Beijing time, the decision was made at 20:15 Beijing time, and GMT held a press conference at 12:45. Recently, the inflation rate in the euro zone has hovered above 2% in both overall and core indicators. This is good news for the ECB.Because the bank has to face an annual inflation rate of more than 10% by the end of 2022.
Lower inflation and uncertainty about growth prospects have allowed Frankfurt-based institutions to cut interest rates by 25 basis points again.
Investors will pay attention to ECB President Christina Lagarde's hints about the central bank's next move. Does large-scale defense spending mean higher inflation and a suspension of interest rate cuts? Will the cost of borrowing fall further?
There are only a few uneasy certainties: Lagarde will emphasize extremely high uncertainty and vow to make decisions based on each meeting.
If Lagarde does not suggest any upcoming rate cuts, but instead takes a wait-and-see attitude, the euro (EUR) may rise.
In addition to hints about further action, investors will also focus on the ECB's updated growth and inflation forecasts that may remain low.
7) Non-agricultural employment data may be lower than expected, affecting market sentiment
Friday, Beijing time at 20:30. Since the beginning of last year, U.S. non-farm employment data has failed to exceed expectations for three consecutive months. Will the current two-month outlook momentum end in May's figures?
In contrast to the volatility expected by non-farm employment data, most corrections are downward. Overall data expectations will change this week when leading indicators such as the ADP Employment Report is released. However, there are good reasons to expect a downward correction for April data.
Did Trump's policies affect employment? There is no clear evidence. Elon Musk lost his job at the Department of Government Efficiency (DOGE) because his efforts to cut spending and fire employees were hardly effective.
Does the tariffs lead to layoffs? How does artificial intelligence (AI) play a role in creating or eliminating positions? Non-farm employment data for May may reveal some recent trends. hejiba.cn recruitment is likely to slow down, but hejiba.cn unemployment is unlikely.
Although the economic calendar is rich this week, it is important to note that trade-related headlines may appear at any time, triggering unexpected price fluctuations. Please be cautious when trading.
The above content is all about "[XM Forex Decision Analysis]: Five major events that will happen in the global market this week". It was carefully hejiba.cnpiled and edited by the editor of XM Forex. I hope it will be helpful to your trading! Thanks for the support!
Due to the author's limited ability and time constraints, some content in the article still needs to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues: