Like last week, trade is going to be the main focus among the investors this week. Last week, the US announced that it would impose tariffs on steel and aluminum on the European Union (EU), Japan, Canada, and Mexico. These countries were given exemptions when the US announced the tariffs. They were given the exemptions so that they could negotiate with the US. South Korea negotiated and announced that it would open up its market to American cars. The other countries played hard ball, meaning that the steel to their biggest market will be more expensive.
After the announcement was made, the countries announced that they would retaliate against the US. Canada announced that it would place tariffs on American imports, especially those from republican-held states. The EU announced that it would block the measures at the World Trade Organization (WTO). Ultimately, if the countries impose tariffs, the US will double down. In fact, the US is already researching about German-made cars.
The Reserve Bank of Australia (RBA) will announce its interest rate decision on Tuesday. The bank is expected to leave rates unchanged at 1.50%. Traders will look at the accompanying statement with the aim of knowing how the officials view the economy. Today, the Australian retail sales grew by 0.4%, beating the analysts’ estimates of 0.2%. The company’s gross operating profits of 5.9% beat the estimates of 3.0%. Tomorrow, the country will release its quarterly GDP numbers. Markets expect the economy to have expanded by 0.8% and at an annual rate of 2.7%. This will be the only major central bank which will meet this week.
Today, Markit will release the PMI data of several countries. The UK services PMI data is expected to be at 53, which will be higher than the expected 52.8. For the EU, the composite PMI is expected to remain unchanged at 54.1 while the services PMI is expected to remain unchanged at 53.9. This data will be released a few hours before ECB president, Mario Draghi delivers a speech.
On Thursday, we will receive the unemployment numbers from Switzerland. The unemployment rate is expected to drop to 2.6% from the April 2.7%. We will also get the Bank of Canada (BOC) financial system review, which will be followed by a speech by the governor of the bank.
On Friday, we will get important data from Japan. In the morning, we will receive the GDP numbers from the country. We expect the numbers to show that the economy expanded by a quarterly rate of negative 0.9% and at an annual rate of 0.9%. The latter will be an improvement from the lastly released -0.6%. Other data which will be released include the private and business consumption, the current account, and the bank lending rate.