China, not wanting to be left behind technologically, has announced a $47.5 billion investment (compared to $53 billion in the US CHIPS programme) in its semiconductor industry. The venture is to be funded by six major state-owned banks. The new investment in the Chip Industry aims to reach international standards by 2030 and will focus on the design and manufacture of chips and the necessary equipment and materials to do so. The initiative was created largely in response to US high-tech export restrictions, with China taking steps to compete with the West. On Sunday, we will learn the OPEC+ cartel's decision on oil production levels. Currency investors can look forward to Wednesday's Bank of Canada decision and Thursday's ECB decision on a possible interest rate cut. The week will conclude with US labour market data.
Table of contents:
- OPEC+ meeting on oil production adjustment
- Interest rate decision in Canada
- Eurozone interest rate decision
- US unemployment rate (May)
Sunday, 2.06, OPEC+ meeting on oil production adjustment
OPEC+ cartel countries, which account for more than 40 per cent of global oil production, will decide on crude output levels, as they do every month. OPEC+ will meet on Sunday to discuss policy amid signs of a weakening impact on crude prices. Despite plans for temporary production cuts that now appear permanent, members of the group, including Saudi Arabia and Russia, are likely to extend the cuts. This frustrates countries such as Iraq and the United Arab Emirates, which appear keen to increase output.
Due to increased production in non-OPEC+ countries such as the US and Brazil and unsatisfactory demand, Saudi Arabia has cut production to around 9 million barrels per day. Analysts forecast that OPEC+ will extend the voluntary cuts by 2.2 million barrels per day.
Source: MacroMicro
Larger-than-expected production cuts may act bullishly on oil prices, while higher-than-expected production may act bearishly on oil prices.
Impact: XTIUSD, XBRUSD
Wednesday, 5.06, 15:45 CET, interest rate decision in Canada
The Bank of Canada, as expected, kept the main interest rate at 5 per cent in April and did not announce reductions due to inflation risks. Although price pressures have eased, macroeconomic uncertainty and higher commodity prices are hampering the decline in inflation. The bank forecasts inflation of around 3 per cent in the first half of this year and a target of 2 per cent in 2025.
The current analyst forecast is for Canada to maintain interest rates at 5 per cent.
Source: Tradingeconomics.com
A higher-than-expected interest rate could be bullish for CAD, while a lower-than-expected interest rate could act bearishly on CAD.
Impact: USD/CAD. EUR/CAD
Thursday, 6.06, 14:15 CET, Eurozone interest rate decision
The European Central Bank kept interest rates at record high levels at its April meeting: 4.5 per cent for the main refinancing rate and 4 per cent for the deposit rate. The Bank will consider easing policy if inflation moves steadily towards its 2 per cent target. Officials noted that inflation continues to fall, with most measures of core inflation and wage growth easing. However, they warned that domestic price pressures remain strong, leading to high service price dynamics. Governor Christine Lagarde stressed that future decisions would be data-dependent.
Analysts are currently forecasting a change in monetary policy through a first rate cut of 25 basis points, to 4.25 per cent, with a target of 3 per cent by the end of the year.
Source: Tradingeconomics.com
A higher-than-expected interest rate could be bullish for the EUR, while a lower-than-expected interest rate could act bearishly on the EUR.
Impact: EUR/USD
Friday, 7.06, 14:30 CET, US unemployment rate (May)
The US labour market still appears favourable, even though the US unemployment rate rose to 3.9 per cent in April 2024 from 3.8 per cent in the previous month, surprising market expectations of the status quo.
The current analyst forecast is for the unemployment rate to remain at 3.9 per cent.
Source: Tradingeconomics.com
A higher-than-expected reading could have a bearish impact on the USD, while a lower-than-expected reading could be bullish for the USD.
Impact: EUR/USD, US500
Grzegorz Dróżdż, CAI MPW, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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