MACRO MENU: 1 - 5 JUNE 2020

MACRO MENU: 1 - 5 JUNE 2020

Updated: Jun 1

MARKET BRIEFING: Monday 1st June 2020
THE WEEK AHEAD: Sunday 31st May 2020

US-China trade war remains a key risk

Stocks rallied into the close on Wall Street last Friday as market participants breathed a sigh of relief that the latest announcement from US President Donald Trump was not as harsh as some had feared. Despite this, the anti-Chinese rhetoric is unlikely to let up anytime soon so will remain a key risk to market sentiment throughout the week.

If you want to get the full breakdown on what was said, which Chinese and US equities are most at risk and why trade tariffs are hurting consumers, then check out the latest video by my colleague Eddie Donmez HERE.

Markets likely to look beyond the depressing state of the US jobs market

This Friday the median forecast for US unemployment is to rise to 19.6% with the change in Non-Farm Payrolls likely to have declined by 8mln (range low -17mln, high -2.5mln). These pandemic impacted readings will dominate the mainstream media but markets are fully priced for this dire outcome, so impact is likely to be benign.

As per last month don't be shocked if we see another jump in the Average Hourly Earnings (AHE) figures which is purely a reflection of the weighted job losses coming from low paid jobs in leisure and hospitality. Overall, the June report will be more telling as to capture the rate of job recovery as the US continues its gradual re-opening of the economy.

Another half a trillion please!

The ECB is widely expected to announce a EUR 500bln top-up to their bond buying programme this week despite the recent constitutional court ruling in Germany. Attention will also be on the latest Eurosystem and ECB staff macroeconomic projections as well as the press conference from President Christine Lagarde. By then we will also be armed with the latest Manufacturing and Services PMI data which is due on Monday and Wednesday this week.

Brexit talks recommence as deadline approaches

Round 4 of Brexit talks begins this week and in the weekend press the gloves were off. Chief EU negotiator Michel Barnier appeared in an exclusive for the Sunday Times warning the British Prime Minister Boris Johnson that he must keep his promises if he wants to avoid a double economic hit of a no-deal Brexit and the coronavirus pandemic. Meanwhile, David Frost, his UK counterpart, is reported to have become frustrated with the bloc's continued demands over fisheries and a regulatory level-playing field.

As these comments would suggest, we've not moved forward a great deal and I see no reason to believe this week will be any different. How much of an impact will that have on GBP? probably little. Such is politics, this is going down to the wire in traditional Brexit style and although GBP pricing is still somewhat complacent, it may be a little too early for the political pressure to weigh just yet.


Senior trader and mentor Sam North provides a technical look at the charts and his set-ups for the week ahead.


Monday: AU/JN Manufacturing Index, CN Caixin Manufacturing PMI, GE Holiday, SP/IT/GE/EU Manufacturing PMI, UK Manufacturing PMI, Nationwide HPI, US Manufacturing PMI, ISM Manufacturing PMI, Construction Spending, CA RBC Manufacturing PMI, 4th Round of Brexit Negotiations Begin

Tuesday: AU RBA Interest Rate Decision, HIA New Home Sales, Business Inventories, JN Monetary Base, FR Government Budget Balance, SP Unemployment Change, UK M4 Money Supply, Mortgage Approvals/Lending, BoE Consumer Credit, 10-yr Auction, US ISM NY Index, Weekly API Inventories, NZ GDT Price Index

Wednesday: AU Services Index, GDP, Building Approvals, JN Services PMI, CN Caixin Services PMI, SP/IT/FR/GE Services PMI, IT Monthly Unemployment Rate, GE Unemployment Change/Rate, 5-yr Auction, EU Services PMI, PPI, Unemployment Rate, UK BRC Shop Price Index, US ADP Employment Change, Services PMI, Factory Orders, ISM Non-Manufacturing PMI, Total Vehicle Sales, Weekly DoE Inventories, CA BoC Interest Rate Decision, RBA's ullock Speaks

Thursday: AU Trade Balance, JN 30-yr Auction, SP 3/5-yr Auction, FR 10-yr Auction, EU ECB Interest Rate Decision, Press Conference, Retail Sales, UK Construction PMI, US Challenger Job Cuts, Weekly Jobless Claims, Trade Balance, Unit Labour Costs, US Announce 3/10/30-yr Auctions Sizes

Friday: JN Household Spending, Leading Index, SP Industrial Production, IT Retail Sales, GE Factory Orders, UK GfK Consumer Confidence, Halifax HPI, US Non-Farm Payrolls, Unemployment Rate, Average Hourly Earnings, Baker Hughes Rig Count, CA Employment Change, Unemployment Rate, Ivey PMI

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