Next week to watch (29.05 – 02.06)

26.05.2023 12:05|Investment Advice Department, Conotoxia Ltd.

Next week, the US consumer confidence might give us an image of consumer attitude towards the still-ongoing debt ceiling deadlock in the US. In addition, the Eurozone CPI and the US unemployment rate will be released, providing insight into central banks' efforts to control inflation.

Tuesday 30.05. 14:00 GMT, U.S. CB Consumer Confidence (May)

The Conference Board's Consumer Confidence Index (CCI) measures consumer confidence in the economy. It is an indicator that can predict future consumer spending, a key factor in overall economic activity. Higher values indicate greater consumer optimism.

The reading is forecast to be 99. If this forecast comes to fruition, it will be the first time since July 2022 that the reading has been below 100. The previous reading was 101.3, with forecasts for 104. The index appears to have been on a downward trend since mid-2021.

Source: The Conference Board

If the reading is higher than expected, it may be interpreted as positive/bullish for the USD. In contrast, a lower-than-expected reading may be interpreted as negative/bearish for the USD.

Impact: USD

Wednesday 31.05. 01:30 GMT, China Manufacturing Purchasing Managers Index PMI (May)

The PMI index for China's manufacturing sector is a monthly indicator that measures economic activity in the sector. It is compiled by the China Federation of Logistics & Purchasing (CFLP) and the China Logistics Information Centre (CLIC) based on data provided by the National Bureau of Statistics (NBS). The Li & Fung Research Center compiles and provides the PMI report in English. More than 700 manufacturing companies across China receive questionnaires about their purchasing and supply situations each month. The data presented here have been collected from the responses of these enterprises. To have a full picture, it may be useful to compare the PMI with other economic data.

The forecast for the upcoming reading is 51.4. The previous reading was 49.2, with a forecast of 51.4. In the long term, the index level is relatively stable, although there has been a lot of deviation recently.

Source: Statista.com

If the reading is higher than expected, it may be interpreted as positive/bullish for the CNY. In contrast, a lower-than-expected reading may be interpreted as negative/bearish for the CNY.

Impact: CNY

Thursday 01.06. 14:00 GMT, U.S. ISM Manufacturing Purchasing Managers Index PMI (May)

The Institute of Supply Management's (ISM) Manufacturing Purchasing Managers' Index (PMI) report is based on monthly responses from purchasing and supply managers at more than 400 industrial companies. 

The PMI is a composite index based on seasonally adjusted diffusion indices for five of the indicators with different weights: new orders (30%), production (25%), employment (20%), supplier deliveries (15%), and inventories (10%). An index score above 50 indicates an expansion, while a reading below 50 points to contracting market conditions.

The forecast for the upcoming reading is 47. Previously, the index was 47.1, with forecasts of 46.8. There has been a noticeable downward trend in this index for about 1.5 years, but if the reading exceeds the forecast, it could indicate the end of the downward trend.

Source: YCharts

If the reading is higher than expected, it may be interpreted as positive/bullish for the USD. In contrast, a lower-than-expected reading may be interpreted as negative/bearish for the USD.

Impact: USD

Thursday 01.06. 09:00 GMT, Eurozone Consumer Price Index (CPI) YoY (May)

The Consumer Price Index (CPI) is a tool used to monitor changes in the prices of goods and services that consumers buy. The CPI is an important indicator because it helps us understand the trends in consumer purchases and how inflation affects their purchasing power. The CPI is calculated based on a basket of goods and services representing typical consumer spending. It includes various categories such as food, housing, transportation, health care, etc. Regular measurements of the CPI allow us to track how the prices of these products and services change over time. A positive CPI indicates an overall increase in the prices of goods and services. On the other hand, a negative CPI means that prices are lower than the year before. By analyzing its changes, economists and policymakers may assess the impact of inflation on the economy and take appropriate action. The CPI also matters to consumers because it helps them understand how their money is losing value in the context of rising or falling prices. This information allows them to adjust their spending, plan savings, or make other financial decisions.

The forecast for the upcoming reading is 7.0, the same as the previous reading and its forecast. Inflation in the Eurozone generally declines, although this decline has temporarily slowed slightly.

Source: Ycharts

On the one hand, if the reading is higher than expected, it means higher inflation, which favours a fall in the euro, but on the other hand, it is an incentive for the ECB to raise interest rates and reduce the money supply. From that point of view, it could point to a rise in the euro's value. However, if the reading is lower than expected, it would mean lower inflation, but it could give the ECB an argument to cut interest rates and increase the money supply.

Impact: EUR

Friday 02.06. 12:30 GMT, U.S. Unemployment Rate (May)

The unemployment rate is the percentage of people without a job who are actively seeking employment in the previous month relative to the total number of people of working age or in the labour market. A high unemployment rate means that a large number of people are out of work despite actively seeking employment. A low unemployment rate indicates a stable labour market and greater availability of jobs. 

Unemployment rates are important for economic analysis and can affect social and economic aspects. A high unemployment rate is associated with lower incomes and increased poverty, while a low unemployment rate promotes increased wages and social welfare. Governments and policymakers monitor the unemployment rate to assess the effectiveness of employment policies and take action to create jobs and support the unemployed. However, it should be remembered that the unemployment rate is one of many tools for assessing the labour market. Analyzing other indicators, such as the labour force participation rate or wages, is also important.

The forecast for the upcoming reading is 3.5. The previous reading was 3.4%, with a forecast of 3.6%. The unemployment rate has been stable at a low level for a year.

Source: Ycharts

A higher-than-expected reading may be seen as negative/bearish for the USD, while a lower-than-expected reading may be seen as positive/bullish for the USD.

Impact: USD

Stocks to watch

HP Inc (HPQ) announcing its earnings results for the quarter ending on 04/2023. Forecasted EPS: 0.7584. Positive earnings surprise in 8 out of the last 10 reports. Time: Tuesday, May 30, after the market closes.

Salesforce Inc (CRM) announcing its earnings results for the quarter ending on 04/2023. Forecasted EPS: 1.61. Positive earnings surprise in 10 out of the last 10 reports. Time: Wednesday, May 31, after the market closes.

Crowdstrike Holdings (CRWD) announcing its earnings results for the quarter ending on 04/2023. Forecasted EPS: 0.5088. Positive earnings surprise in 10 out of the last 10 reports. Time: Wednesday, May 31, before the market opens.

Broadcom (AVGO) announcing its earnings results for the quarter ending on 04/2023. Forecasted EPS: 10.14. Positive earnings surprise in 10 out of the last 10 reports. Time: Thursday, June 1, after the market closes.

Lululemon Athletica (LULU) announcing its earnings results for the quarter ending on 04/2023. Forecasted EPS: 1.96. Positive earnings surprise in 10 out of the last 10 reports. Time: Thursday, June 1.

 

Santa Zvaigzne-Sproge, CFA, Head of Investment Advice Department at Conotoxia Ltd. (Conotoxia investment service)

Materials, analysis, and opinions contained, referenced, or provided herein are intended solely for informational and educational purposes. The personal opinion of the author does not represent and should not be constructed as a statement, or investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73,18% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Santa Zvaigzne-Sproģe, CFA

Santa Zvaigzne-Sproģe, CFA

Head of Investment Advice Department

A certified financial analyst with a broad experience in financial markets obtained working as a broker and securities specialist in various financial institutions across the Baltics.

In addition to obtaining the prestigious CFA license from CFA Institute and Advanced Certificate from CySEC in 2022 as well as Investment Advisor’s license from Baltic Financial Advisor’s Association in 2019, Santa holds MBA from Swiss Business School in Switzerland and master’s degree in finance from BA School of Business and Finance in Latvia.


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71.98% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71.98% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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