Week Ahead: Market pins hopes on strong NFP print

Morning Note

A new month brings a fresh nonfarm payrolls report. Markets will be hoping August’s big miss was just a fluke. Aussie and Kiwi central banks prep big statements too while OPEC+ gathers for its October policy talks. 

Tapering or no tapering, Friday’s nonfarm payrolls report is still a big one for the US. 

Markets will be looking to see if there’s a reversal of fortune in the American jobs market after August’s print fell way below expectations. NFPs totalled 275,000 for August, missing market expectations of 750,000 by a country mile. 

The unemployment rate had dropped a smidgen lower to 5.2% while labour force participation went unchanged at 61.7%. Hourly earnings rose 0.6% in August, surpassing market predictions of a 0.3% rise. 

We know that Jerome Powell and the Fed loves a strong jobs report. But we also know that regardless of September’s data tapering is on its way – likely in November. Of course, if this Friday’s report is truly shocking, that may cause a wrinkle in the Fed’s tapering plans, but all indicators suggest we’re on course for tapering soon. 

However, Fed Chair Powell still believes the US is still far from where he’d comfortably like employment to be. 

Speaking last week, Powell said: “What I said last week was that we had all but met the test for tapering. I made it clear that we are, in my view, a long way from meeting the test for maximum employment.” 

When will that come? According to a recent survey taken by the National Association for Business Economics, 67% of participating economists believe job levels will reach pre-pandemic levels by the end of 2022. Just under a third believe job recovery won’t happen until 2023. 

There is a long road to recovery still to tread. We have seen, however, multiple instances across 2021 where nonfarm payrolls jump after a previous disappointing month. 

The leap from January to February, for example, saw a leap from -306,000 NFPs to +233,000. Nonfarm payrolls rose from 269,000 to 614,000 between April and May 2021. There is a precedent here.  

More than 7.5m Americans have also had their pandemic unemployment support snipped. $300 top-up payments were halted in early September as the government begins scaling back fiscal aid. Could this be a catalyst for more hires? Perhaps we’ll see in Friday’s nonfarm payrolls print. 

Away from the US, both major Antipodean central banks are due to make their most current rate statements this week. 

Starting with Australia, Governor Phillip Lowe and his colleagues seemed to move towards a more flexible policy at September’s Reserve Bank of Australia meeting. As such, markets aren’t anticipating any drastic changes in October. 

We saw rates stay as low as they have past year and a half in Australia. The RBA remains committed to fully committed to not raising the cash rate “until actual inflation is sustainably within the 2 to 3 per cent target range”. 

September’s statement did reveal some nuanced changes. 

The cash rate and three-year control rate all remained at 0.1% but the bond-buying programme taper wording did get a tweak. Originally, it was going to be reviewed no later than November, having been dropped down to AU$ 4bn per week in July. Now, it will be kept at that level until at least February 2022. 

Basically, all this means is that the pace of RBA asset purchases isn’t going to slow until next February. After July’s meeting, it was thought that the Bank would begin reviewing bond-buying every three months before removing it altogether over the course of the year. That doesn’t look like the case just yet. 

Still, we’re not really expecting any fireworks when the RBA delivers its October rate statement on Tuesday morning. 

Markets may have anticipated more hawkish moves from the Reserve Bank of New Zealand instead – but recent comments from Assistant Governor Christian Hawksby suggest any talk of a major cash rate hike are premature. 

“Central banks globally tend to follow a smoothed path and keep their policy rate unchanged or move in 25 basis point increments,” Hawksby said, putting paid to any ideas of a 50 basis point upswing in New Zealand’s 0.25% cash rate. 

Instead, it is likely to follow an incremental path before taking rates up to 1.5% by the end of 2022. 

But, as ever, there is a big COVID-19 shadow looming over New Zealand fiscal policy. The country recently went back into lockdown after a rise in Delta variant cases. Although it’s starting to remerge once again, the small number of incidents may have been enough to give the RBNZ the jitters. 

According to Reuters, markets are pricing in a 60% chance of a rate hike on Wednesday when Governor Orr speaks. 

Finally, OPEC and allies meet once more for their monthly get together and policy bash on Monday. 

With prices high and demand along with them, we’ll probably see a rubber-stamping of more output to come. OPEC+ has committed to pumping an additional 400,000 bpd each month until the end of next year as it seeks to recover pandemic-induced losses. 

According to September’s Monthly Oil Market Report, OPEC+ believes demand will exceed 2019 levels by the end of 2022.  

With Brent crude nudging towards $80 at the time of writing, the US is sounding alarm bells over the price of gasoline. The US has historically enjoyed much cheaper petrol prices than some other developed nations and anything that challenges that is seen as unacceptable by Joe Sixpack and Joe Biden. 

The President said the US is currently in talks with OPEC about raising volumes further to cover this – perhaps ignoring the fact that US shale is ready to add at least 800,000 bpd to global supplies once it gets up and running. 

OPEC+ is very much its own creature anyway. Everything it does is in the interest of its member states, allies, and worldwide oil prices as a whole. Whether Biden’s pleas fall on deaf ears, we don’t quite know, but I wouldn’t be surprised to see OPEC-JMMC sticking to its own agenda in October and beyond. 

Major economic data 

Date  Time (GMT+1)  Asset  Event 
Mon 04-Oct  All Day  OIL  OPEC-JMMC Meetings 
       
Tue 05-Oct  4.30am  AUD  RBA Rate Statement 
  4.30am  AUD  Cash Rate 
  3.00pm  USD  ISM Services PMI 
       
Wed 06-Oct  2.00am  NZD  Official Cash Rate 
  2.00am  NZD  RBNZ Rate Statement 
  1.15pm  USD  ADP Nonfarm Employment Change 
  3.30pm  OIL  US Crude Oil Inventories 
       
Thu 07-Oct  3.30pm  GAS  US Natural Gas Inventories 
       
Fri 08-Oct  1.30pm  CAD  Employment Change 
  1.30pm  CAD  Unemployment Rate 
  1.30pm  USD  Average Hourly Earnings m/m 
  1.30pm  USD  Nonfarm Employment Change 
  1.30pm  USD  Unemployment Rate 
  Tentative  USD  Treasury Currency Report 

The markets month ahead: key events for your trading diary in October

Get a look at the coming month’s important market-moving events with our October trading preview. 

Economic events to watch in October 

OPEC-JMMC meetings – Monday 4th October  

The month begins in earnest with OPEC-JMMC meetings. OPEC+ comes together for its monthly policy talks. No shocking surprises are expected this month. Instead, we’ll probably see a rubber-stamping of the planned output increase of 400,000 bpd.  

RBA rate statement – Tuesday 5th October  

The Reserve Bank of Australia releases its newest rate statement at the start of the month. Markets forecast no hike for the foreseeable future. The cash rate will probably stay at its historic low. 

RBNZ rate statement – Wednesday 6th October  

Joining its Australian cousin in starting the month with a rate decision is the Reserve Bank of New Zealand. Economists think an increase in the 0.2% cash rate will come – but not the 0.5% increase forecast. 

US nonfarm payrolls – Friday 8th October 

Jerome Powell and the Fed, plus the wider markets, will be watching the month’s NFP data carefully. August’s data missed the mark by miles – will September’s stats point towards a US labour market surge? 

US CPI data – Wednesday 13th October 

Consumer Price Index rises cooled in August, backing the Fed’s stance that current high prices are all transitionary. Month-on-month price gains slowed to 0.3%. September’s CPI stats are released on Wednesday 13th of October. 

US retail sales data – Friday 15th October 

Retail sales across America picked up an unexpected bump in August. Sales were up 0.7% according to the Census Bureau. Observers were calling for a 0.7% decline, driven by rising Delta-variant COVID cases. Will we see an upward swing in September too? 

UK CPI data – Tuesday 20th October 

UK inflation is running hot. Last month’s report showed it growing at the fastest rate since records began, rising at 3.2%. It may be all transitionary, but if inflation punches above the Bank of England’s 4% target, then the UK’s central bank may be forced to act. 

European PMIs – Friday October 22nd 

Brace for the monthly European flash PMI blitz with all the key economic activity indicators from France, Germany, and the EU all inbound. Eurozone composite PMI readings for September missed expectations of 58.5 coming in at 56.1. Still in growth, but it looks like activity is starting to slow. 

Bank of Canada rate statement – Wednesday October 27th 

The first rate statement of Justin Trudeau’s third term comes this month. Governor Tiff Macklem and co. stuck to their guns in September, keeping the 0.25% rate in place and the QE pace the same. It’s probable October’s statement will bring much the same. 

ECB Press Conference – Thursday October 28th  

The European Central Bank scaled back its bond-buying programme in September in a bid to cool soaring inflation. Its October moves will likely all come down to how EU CPI reacted to the change. Rates stayed at 0% and it’s likely they will in the mid-term. 

Major economic data 

Date  Time (GMT+1)  Asset  Event 
Mon Oct-04  8:00am  EUR  Spanish Unemployment Change 
  All Day  All  OPEC Meetings 
  All Day  All  OPEC-JMMC Meetings 
       
Tue Oct-05  4:30am  AUD  RBA Rate Statement 
  4:30am  AUD  Cash Rate 
  Tentative  JPY  BOJ Gov Kuroda Speaks 
  3:00pm  USD  ISM Services PMI 
       
Wed Oct-06  2:00am  NZD  Official Cash Rate 
  2:00am  NZD  RBNZ Rate Statement 
  1:15pm  USD  ADP Non-Farm Employment Change 
  3:30pm  OIL  Crude Oil Inventories 
       
Thu Oct-07  1:30pm  USD  Unemployment Claims 
  3:00pm  CAD  Ivey PMI 
       
Fri Oct-08  1:30am  AUD  RBA Financial Stability Review 
  1:30pm  CAD  Employment Change 
  1:30pm  CAD  Unemployment Rate 
  1:30pm  USD  Average Hourly Earnings m/m 
  1:30pm  USD  Non-Farm Employment Change 
  1:30pm  USD  Unemployment Rate 
  Tentative  USD  Treasury Currency Report 
       
Tue Oct 12  3:00am  CNH  GDP q/y 
  3:00am  CNH  Retail Sales y/y 
  10:00am  EUR  ZEW Economic Sentiment 
  10:00am  EUR  German ZEW Economic Sentiment 
  3:00pm  USD  JOLTS Job Openings 
  6:00pm  USD  10-y Bond Auction 
       
Wed Oct-13  1:30pm  USD  CPI m/m 
  1:30pm  USD  Core CPI m/m 
  6:01pm  USD  30-y Bond Auction 
  7:00pm  USD  FOMC Meeting Minutes 
       
Thu Oct-14  1:30am  AUD  Employment Change 
  1:30am  AUD  Unemployment Rate 
  1:30pm  USD  PPI m/m 
  1:30pm  USD  Core PPI m/m 
  1:30pm  USD  Unemployment Claims 
  4:00pm  OIL  Crude Oil Inventories 
       
Fri Oct-15  7:00am  GBP  Retail Sales m/m 
  1:30pm  USD  Core Retail Sales m/m 
  1:30pm  USD  Retail Sales m/m 
  1:30pm  USD  Empire State Manufacturing Index 
  3:00pm  USD  Prelim UoM Consumer Sentiment 
       
Mon Oct-18  2:15pm  USD  Industrial Production m/m 
  3:30pm  CAD  BOC Business Outlook Survey 
Tue Oct-19  1:30am  AUD  Monetary Policy Meeting Minutes 
       
Wed Oct-20  7:00am  GBP  CPI y/y 
  1:30pm  CAD  CPI m/m 
  1:30pm  CAD  Common CPI y/y 
  1:30pm  CAD  Core Retail Sales m/m 
  1:30pm  CAD  Median CPI y/y 
  1:30pm  CAD  Retail Sales m/m 
  1:30pm  CAD  Trimmed CPI y/y 
  3:30pm  OIL  Crude Oil Inventories 
  10:45pm  NZD  CPI q/q 
       
Thu Oct-21  1:30pm  USD  Philly Fed Manufacturing Index 
  1:30pm  USD  Unemployment Claims 
       
Fri Oct-22  8:15am  EUR  French Flash Manufacturing PMI 
  8:15am  EUR  French Flash Services PMI 
  8:30am  EUR  German Flash Manufacturing PMI 
  8:30am  EUR  German Flash Services PMI 
  9:00am  EUR  Flash Manufacturing PMI 
  9:00am  EUR  Flash Services PMI 
  9:30am  GBP  Flash Manufacturing PMI 
  9:30am  GBP  Flash Services PMI 
  2:45pm  USD  Flash Manufacturing PMI 
  2:45pm  USD  Flash Services PMI 
       
Mon Oct-25  9:00am  EUR  German ifo Business Climate 
       
Tue Oct-26  1:30pm  USD  Core Durable Goods Orders m/m 
  1:30pm  USD  Durable Goods Orders m/m 
  3:00pm  USD  CB Consumer Confidence 
       
Wed Oct-27  1:30am  AUD  CPI q/q 
  1:30am  AUD  Trimmed Mean CPI q/q 
  3:00pm  CAD  BOC Monetary Policy Report 
  3:00pm  CAD  BOC Rate Statement 
  3:00pm  CAD  Overnight Rate 
  3:30pm  OIL  Crude Oil Inventories 
  Tentative  CAD  BOC Press Conference 
       
Thu Oct-28  Tentative  JPY  BOJ Outlook Report 
  Tentative  JPY  Monetary Policy Statement 
  Tentative  JPY  BOJ Press Conference 
  12:45pm  EUR  Monetary Policy Statement 
  12:45pm  EUR  Main Refinancing Rate 
  1:30pm  EUR  ECB Press Conference 
  1:30pm  USD  Advance GDP q/q 
  1:30pm  USD  Advance GDP Price Index q/q 
  1:30pm  USD  Unemployment Claims 
  3:00pm  USD  Pending Home Sales m/m 
       
Fri Oct-29  8:00am  EUR  German Prelim GDP q/q 
  1:30pm  CAD  GDP m/m 
  1:30pm  USD  Core PCE Price Index m/m 
  2:45pm  USD  Chicago PMI 
  3:00pm  USD  Revised UoM Consumer Sentiment 
Sat Oct-30  Day 1  All  G20 Meetings 
       
Sun Oct-31  1:00am  CNH  Manufacturing PMI 
  Day 2  All  G20 Meetings 

Week ahead: Nonfarm payrolls take the spotlight

Week Ahead

It’s all about major economic movers this week. The US jobs report for August is released on Friday, while we kick off the week with the latest Chinese manufacturing PMI numbers. OPEC and allies are due to hold meetings too, making it a busy week for the global economy. 

The US jobs market has taken us to abyssal lows and new dizzying growth heights across the past 18 months. The pandemic has certainly taken its toll, but we’ve seen new life flow through the US’ economic veins too with more workers filling job gaps. 

Just take last month’s nonfarm payrolls. July’s data saw an expectation-smashing 943,000 new jobs added to the economy.  

Friday is when August’s job data is published. Markets of course will be looking at it closely. It’s the big release of the month, after all. But this week’s job’s report takes on a new character given trends we’ve seen in 2021. 

For instance, April’s nonfarm payrolls stood at 785,000 new roles, registering a month-on-month increase of over 200,000. But in May, the NFP report shrank by over 500,000 to 269,000. 

June and July showed consecutive growth months, but it’s important to not get too carried away. We’ve previously seen a bumper report give way to stunted growth in the following month fairly recently.  

The Federal Reserve has explicitly tied policy decisions to labour market health, so this report will be of particular interest in the wake of last week’s Jackson Hole symposium. 

As the start of another month brings another US jobs report so too does it bring another set of OPEC+ meetings. 

Last week WTI and Brent benchmark dropped to 3-month lows, though they have since staged a bit of a rally with Brent crossing over the $70 threshold and WTI pushing over $67. 

Changing demand expectations have weighed on crude prices. Key importers have introduced travel restrictions or new lockdowns. Some Chinese oil ports, for example, have been shuttered as Delta-variant COVID-19 cases rise. 

But OPEC+ has so far stuck to its guns. It’s still committed to upping production by some 400,000 bpd per month from August onwards. It also saw no reason to push those numbers high at the urging of President Biden. For now, 400,000 bpd per month is the level. 

It’s important to reiterate everything OPEC and its allies have done this year has been to support oil prices. With COVID-19 cases mounting worldwide, the supply/demand tightrope the cartel is walking may have narrowed but OPEC+ is likely banking on vaccine rollout to help pick up the slack. 

We all know oil is a key ingredient in economic growth in our current fossil-fuel based worldwide economic system. China is the world’s largest importer of crude, so the nation’s manufacturing output falls under intense scrutiny – especially in the light of potentially lower oil imports in the past couple of months. 

We may be able to see the effects of less oil and a surge in Delta-variant cases across the past month in August’s manufacturing PMI reading. 

July’s reading of 50.4 was the lowest reading for 15 months. June’s 51.3 was a slight bump on May’s 51.0, but the trend seems to be factory output is slowing in the world’s second-largest economy.  

Shutting ports isn’t going to do factory output any favours. Neither will current high commodity prices. Labour shortages and higher input costs have factored into slowdowns in UK and US manufacturing too. This isn’t a localised Chinese phenomenon.  

A PMI reading above indicates that there is still growth, but we’re seeing China perilously close to slipping under that. Tuesday’s PMI release will reveal all. 

Major economic events 

Date  Time (GMT+1)  Asset  Event 
Mon 30-Aug  3.00pm  USD  US Pending House Sales 
       
Tue 31-Aug  2.00am  CNH  Manufacturing PMI 
  1.30pm  CAD  GDP m/m 
  2.45pm  USD  Chicago PMI 
  3.00pm  USD  CB Consumer Confidence 
       
Wed 01-Sep  ALL DAY  OIL  OPEC Meetings 
  ALL DAY  OIL  OPEC-JMMC Meetings 
  2.30am  AUD   GDP m/m 
  8.55am  EUR  German Final Manufacturing PMI 
  1.15pm  USD  ADP Nonfarm Employment Change 
  3.00pm  USD  ISM Manufacturing PMI  
  3.30pm  OIL  US Crude Oil Inventories 
       
Thu 02-Sep  3.30pm  GAS  US Natural Gas Inventories 
       
Fri 03-Sep  1.30pm  USD  US Nonfarm Payrolls 
  1.30pm  USD  Average Hourly Earnings 
  1.30pm  USD  Unemployment Rate 
  3.00pm  USD  ISM Services PMI 
  Tentative  GBP  Monetary Policy Report Hearings 

OPEC+ preview: Delta dawn to delay production cuts sunset?

Commodities
  • OPEC+ expected to maintain slow increase in production
  • WTI & Brent trade close to three-year highs
  • EIA inventory report shows further tightening

The Organisation of Petroleum Exporting Countries and its allies (OPEC+) convene on Thursday, July 1st to discuss the next phase of production constraints. The cartel is already increasing output by 2.1m bpd from May through to July and has successfully carried off this increase whilst still presiding over rising prices. The focus on the meeting is whether to maintain this gradual easing of production curbs in August and potentially beyond. Market expectations suggest OPEC+ will increase output by around 500k bpd in August but there are still plenty of unknowns.

On Wednesday, OPEC secretary general maintained a bullish outlook for oil demand recovery this year but pointed to risks on the horizon. He said that while OECD oil stocks are now below the 2015-2019 average, significant uncertainty in oil markets calls for prudence, highlighting the considerable risk to demand outlook from Covid variants.

Demand recovery is uncertain. Whilst US air travel passenger numbers are almost back to 2019 levels, and German diesel demand has recovered to pre-pandemic levels, there are clearly risks that the spread of variants like Delta around the globe will constrain or delay the pick-up in demand that has generally been expected to take place this year. Delta keeps OPEC mindful of being too loose and suggests it might err on the side of less production for the time being – particularly as so much of this year’s demand is seen returning in the second half (see below).

E.g., Japanese oil demand is still pretty soft with consumption in May down 8.5% vs 2019. It highlights that outside of China, a combination of relatively low vaccination rates and the Delta variant continue to weigh on local crude demand.

Nevertheless, OPEC is unlikely to have to contend with a surge of Iranian oil imports onto the market as progress on the nuclear deal to lift sanctions is slow, with talks delayed, and may never happen. Meanwhile US production has not recovered as quickly as one might have thought – the rig count is higher at 470 but well below the ~800 before the pandemic.

Barkindo said global oil demand should rise 6m bpd in 2021, with 5bpd of that figure due to arrive in H2. This presents a risk that oil demand recovery is weighted to the second half of the year and may not emerge due to new restrictions on mobility in response to new waves of the virus. This could leave OPEC+ unwilling to ease of restraints as much as the market thinks it will. On the other hand, there is evidence the market is increasingly tight and OPEC may prefer to ease off a touch to loosen it. Goldman Sachs reckons global demand will rise by an additional 2.2m bpd by the end of 2021, which would leave a 5m bpd supply shortfall. “Ultimately, much more OPEC+ supply will be needed to balance the oil market by 2022,” the bank said in a note.

An internal OPEC report seen by Reuters indicates the cartel is worried the market will return to surplus after the self-imposed output curbs end in April 2022. This could lead to discussion about extending supply cuts beyond that date. An extension would pick up the back end of the curve, which is looking a bit tired, and net would be considered bullish for prices, but could be offset by a larger-than-expected increase in the near-term to compensate some members.

Prices have rallied strongly this year, but members of the cartel need even higher crude prices. The OPEC average fiscal breakeven oil prices stand at $93, according to RBC, which thinks OPEC+ could add anything from 500k bpd to 1m bpd in August.

EIA weekly report

Ahead of the meeting, the latest EIA report today shows a continued draw on inventories. Stockpiles declined by 6.7m barrels, vs the estimated draw of 3.8m, supported by a net 500k bpd decline in imports and a 200k bpd increase in refinery demand. Total products supplied over the last four-week period averaged 20.0 million barrels a day, up by 13.3% from the same period last year.

US commercial crude oil inventories decreased by 6.7 million barrels in the week to Jun 25th from the previous week, yet another weekly draw that leaves inventories at their lowest since March 2020. At 452.3 million barrels, inventories are about 6% below the five-year average for this time of year. Total motor gasoline inventories increased by 1.5 million barrels, whilst distillates fell by 900k.

WTI price action

Post the EIA report it’s pretty much as you were with all eyes on OPEC+. As we flagged in Tuesday’s morning note, there is something of a technical hitch for oil. So far this market has been a buy-the-dip affair as WTI edged up above $74 this week to its highest in almost three years, moving close to a 6-year high in the mid-70s; and market fundamentals are solid as supply remains tight. But Monday’s outside day bearish engulfing candle is a potential red flag, while the bearish MACD crossover on the daily chart is another. RSI bearish divergence is a third with a higher high on the price met by a lower high on the 14-day RSI, indicating buyer exhaustion. This is not necessarily the top but would call for a potential near-term pullback such as a ~10% correction as seen in Mar/Apr this year.

500k bpd is the baseline – go beyond that to 750k, 1m then it’s a bearish reaction in the market. Go under and it’s bullish. But these would be only the immediate responses and market fundamentals remain positive even with more crude coming on stream. Technicals are less inclined to support the bullish outlook in the immediate near-term sense. A temporary pullback would allow for the bulls to take a breath before resuming the uptrend.

Crude oil price action chart ahead of OPEC+ July meeting.

Week Ahead: US jobs report holds key to market direction amid inflation fears

Week Ahead

US nonfarm payrolls dominate the data calendar this week. The key jobs market metric is usually a massive market mover, so a lot of attention will be on the state of the nation’s labour market when the latest reading is printed on Friday.  

OPEC-JMMC monthly meetings kick off mid-week as oil markets strengthen globally. The Reserve Bank of Australia also shares its latest cash rate decision –likely a copy-paste of May’s non-mover. 

Starting with the US, the country will be hoping some of March’s job market fervour shows up in May’s reading following April’s bust. Last month’s NFP saw roughly a quarter of expected new jobs created, falling far below estimates. 

April’s numbers clocked in at 266,000 jobs created. Estimates were hoping for over a million, buoyed by the rapid economic growth and March’s NFP coming in at 916,000. 

As of the end of April, 9.8 million Americans were still unemployed. What’s interesting is that job openings at the end of March totalled 8.1 million, substantially narrowing the wedge. Labour demand and labour supply are realigning but aren’t quite level yet, causing some friction. 

There are still concerns amongst the general population about contracting the virus, despite 50% of eligible recipients getting vaccines. Two-thirds of school age children have not returned to the classroom. Some may not be willing to give up their unemployment benefits just yet either. 

The jobs report will be closely watched by the market as a guide on how soon the Federal Reserve may be expected to start removing accommodation. The Fed has tied its colours to the employment mast and the slower the gains in employment, the easier Fed policy will remain. Inflation complicates the picture but thus far markets believe the Fed when it says it will look through ‘transitory’ price pressures.  

OPEC-JMMC meetings are slated for June 1st. The cartel’s 2021 mission has been to protect oil markets and strengthen prices. Production cuts have been the key here. Full pre-pandemic output volumes are yet to be re-established. Despite global economies reopening, and oil demand rising, OPEC and allies are still feeling cautious. 

Even so, more crude is coming from OPEC members. They have been gradually tapering output curbs for the past couple of months. June’s meeting will be cementing plans for July and August, i.e. whether to ramp up the taper or keep it in line with the cartel’s original plan. 

At the April 1st meeting, OPEC-JMMC agreed to bring 2.1m barrels per day (bpd), back to markets between May-July. Cuts will be eased back to 5.6m bpd.  

OPEC is banking on higher oil demand this year. Its recovery outlook suggests daily demand will reach 6m bpd by the end of 2021 – a major rise against 2020’s levels, but still some 3.5bpd less than pre-pandemic levels. 

While vaccine rollout has been successful in key importing countries, there are still concerns. Rising coronavirus cases in India, the world’s third-largest oil importer, has weighed heavily on OPEC. There is still lots of ground to cover before global oil markets resemble anything like their pre-Covid 19 selves. 

Attention will also be on the Reserve Bank of Australia – the next central bank to fill us in on any upcoming tweaks to Australia’s financial policy. 

A cash rate decision is due. Chances are nothing momentous is coming. Australia’s cash rate has remained at 0.10% since November 2020. Governor Dr Philip Lowe has indicated it’s probably not going to rise in 2021. Based on previous statements, we won’t see an Australian cash rate hike until 2024 at the earliest.  

Dr Lowe states inflation targets and a lower unemployment rate are the key metrics the RBA is using as cash rate hike triggers. The RBA expects inflation to be 1.5% in 2021, it said in its May statement, and 2% in mid-2023. Before it raises rates, the Bank has repeatedly said it wants inflation to be ‘comfortably’ within the 2-3% range. 

In terms of labour markets, the RBA expects unemployment rates to reach 4.8% by year-end 2021 before dropping slightly to 4.4% in 2022. 

Major economic data 

Date  Time (GMT+1  Asset  Event 
Mon 31-May  2.00am  CNH  Manufacturing PMI 
       
Tue 01-Jun  All Day  Oil  OPEC-JMMC Meeting 
  5.30am  AUD  Cash Rate 
  5.30am  AUD  RBA Rate Statement 
  1.30am  CAD  GDP m/m 
  3.00pm  USD  ISM Manufacturing PMI 
       
Wed 02-Jun  2.30am  AUD  GDP q/q 
       
Thu 03-Jun  2.30am  AUD  GDP m/m 
  3.00pm  USD  ISM Services PMI 
  3.30pm  Nat gas  US Natural Gas Inventories 
  4.00pm  Oil  US Crude Oil Inventories 
       
Fri 04-Jun  1.30pm  CAD  Employment Change 
  1.30pm  CAD  Unemployment Rate 
  1.30pm  USD  Average Hourly Earnings m/m 
  1.30pm  USD/Indices/Gold  Non-farm Employment Change 
  1.30pm  USD  Unemployment Rate 

 

Key earnings data 

Date  Company  Event 
Tue 01-Jun  Zoom  Q1 2022 Earnings 
  Scotiabank  Q2 2021 Earnings 
  Hewlett Packard  Q2 2021 Earnings 
     
Wed 02-Jun  Splunk  Q1 2022 Earnings 
     
Thu 03-Jun  Broadcom  Q2 2021 Earnings 
  Slack  Q1 2022 Earnings 

 

CySEC (EU)

  • Client’s funds are kept in segregated bank accounts
  • FSCS Investor Compensation up to EUR20,000
  • 1,000,000 insurance cover** 
  • Negative Balance Protection

Products

  • CFD
  • Share Dealing
  • Strategy Builder

Markets.com, operated by Safecap Investments Limited (“Safecap”) Regulated by CySEC under licence no. 092/08 and FSCA under licence no. 43906.

FSC (GLOBAL)

  • Clients’ funds kept in segregated bank accounts
  • Electronic Verification
  • Negative Balance Protection
  • $1,000,000 insurance cover** 

Products

  • CFD
  • Strategy Builder

Markets.com, operated by Finalto (BVI) Ltd by the BVI Financial Services Commission (‘FSC’) under licence no. SIBA/L/14/1067.

FCA (UK)

  • Client’s funds are kept in segregated bank accounts
  • FSCS Investor Compensation up to GBP85,000
    *depending on criteria and eligibility
  • £1,000,000 insurance cover** 
  • Negative Balance Protection

Products

  • CFD
  • Spread Bets
  • Strategy Builder

Markets.com operated by Finalto Trading Ltd. Regulated by the Financial Conduct Authority (“FCA”) under licence number 607305.

ASIC (AU)

  • Clients’ funds kept in segregated bank accounts
  • Electronic Verification
  • Negative Balance Protection
  • $1,000,000 insurance cover**

Products

  • CFD

Markets.com, operated by Finalto (Australia) Pty Ltd Holds Australian Financial Services Licence no. 424008 and is regulated in the provision of financial services by the Australian Securities and Investments Commission (“ASIC”).

Selecting one of these regulators will display the corresponding information across the entire website. If you would like to display information for a different regulator, please select it. For more information click here.

**Terms & conditions apply. Click here to read full policy.

Marketsi
An individual approach to investing.

Whether you’re investing for the long-term, medium-term or even short-term, Marketsi puts you in control. You can take a traditional approach or be creative with our innovative Investment Strategy Builder tool, our industry-leading platform and personalised, VIP service will help you make the most of the global markets without the need for intermediaries.

La gestión de acciones del grupo Markets se ofrece en exclusiva a través de Safecap Investments Limited, regulada por la Comisión de Bolsa y Valores de Chipre (CySEC) con número de licencia 092/08. Le estamos redirigiendo al sitio web de Safecap.

Redirigir

Are you lost?

We’ve noticed you’re on the site. As you are connecting from a location in the you should therefore consider re-entering , which is subject to the product intervention measures. Whilst you’re free to browse here on your own exclusive initiative, viewing the site for your country will display the corresponding regulatory information and relevant protections of the company you choose. Would you like to be redirected to ?