Three markets to watch next week (04.06.2021)

5:19 PM June 4, 2021

NFP data was released today and now investors will focus on another key reading from the US - CPI inflation for May. Price growth is expected to accelerate further with headline gauge seen jumping to 4.6% YoY. Apart from that, rate decisions from BoC and ECB will keep traders entertained. Be sure to watch these three markets next week!


The S&P 500 (US500) struggled to break above the all-time high reached in the first half of May. While the index continues to trade near record levels, it began to underperform European peers. Inflation, and possible quicker monetary tightening, remains the prime concern of stock investors. US CPI data for May will be released on Thursday, 1:30 pm BST and is expected to show further acceleration. However, the key question is whether the Fed continues to ignore it.


The European Central Bank is set to announce a monetary policy decision on Thursday, 12:45 pm BST. There is a growing consensus that the ECB may decide to extend the period of "significantly higher" PEPP purchases for another 3 months (Q3 2021). ECB members Panetta and Villeroy said that there is no justification for reducing bond purchases just now. As usual, the biggest attention will be paid to Lagarde's presser at 1:30 pm BST. Will the ECB be able to boost the euro after EURUSD dropped to a 3-week low this week?


The Bank of Canada has hit a hawkish note during its latest policy announcement in April. BoC said that it expects slack in the economy to be absorbed in the second half of 2022, while earlier it had expected it to happen in 2023. Will the upcoming rate announcement be a similar hawkish surprise? We shall see on Wednesday at 3:00 pm BST! USDCAD has been trading sideways recently but the BoC announcement may be a trigger for a larger move.


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