Rates Of Australia And NZ Are In Focus After Big Guys Have Set The Market’s Tone

In the last trading day of this week, the US dollar declined significantly against its peers after the important data of labor market were released. The dollar index DXY stumbled to a three-week low at 93.87, down 1.8% from the previous close on Thursday. According to the Bureau of Labor Statistics, there were only 38,000 jobs creations last month, the most sluggish growth since September 2011.

Bad luck seems not to disengage the U.S even unemployment rate in May posed at 4.7%, a record low in almost nine years, as Americans are dropping out of the labor force.

A slowdown in US labor market contributed to raising concerns over economic growth speed and stability. As a result, investors are currently holding a doubt of rate hike possibility in June.

At a meeting on Thursday, the European Central Bank (ECB) decided to keep its benchmark rate unchanged at 0.00%. In addition, officials agreed to raise the inflation forecasts for the Eurozone this year to 1.6% from 1.4%, while the estimate for next year remains at 1.7% and slides to 1.7% from 1.8% in 2018. ECB President Draghi also commented that this area still witnessed subdued prospects due to the slowdown in emerging markets and governments’ efforts to upgrade their economies have not taken into effect widely.

On the same day, the Organization of the Petroleum Exporting Countries (OPEC) failed to agree to a clear oil-output strategy as Iran insisted on raising production to regain market share lost during years of sanctions. Oil prices found support again in U.S. Energy Information Administration’s announcement of a fall of 1.4 million barrels in crude inventories, the third weekly decline in a row. Closing this week, oil prices still hovered around the threshold of $50 per barrels, a record high since last October.

On the first day of June, China’s statistics agency reported that manufacturing PMI of this country in May matched the previous level at 50.1, while the index for non-manufacturing sector posed at 53.1 in comparison with 53.5 in April. The second largest economy is witnessing signals of stabilization lately as the official factor gauge remained above the average for a third month.

By contrast, the British economy grew in a sluggish way last month. Data coming on the first three days in June showed that the PMI index for the manufacturing and services registered at 50.1 and 53.5 respectively, higher than the preceding month’s but still well below the readings in one year earlier.

The central banks of Australia and New Zealand will release their interest rates in the upcoming week. While Australian cash rate is expected to be kept at 1.75% as deployed in May, the Reverse Bank of New Zealand is awaited to adopt a lower rate at 2.00%, compared with the level of 2.25% in two months before.

On Monday, the FED Chairwoman Yellen is scheduled to talk about the economic outlook and monetary policy in Philadelphia. Due to the weak jobs report in May, her speech is likely to be used as a market reassurance that the central bank will soon seek new measures to stimulate the economy.

Next Friday, the Statistics Canada will publish the report of labor market in May, with analysts’ forecasts that there will be 1,100 people employed during last month and the unemployment rate may stay unchanged at 7.1%.

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