As US traders return to the markets following the Memorial Day holiday, a spate of economic releases will await them. Much of the event risk for the US dollar will likely come from weakening in the housing sector, consumer confidence, and durable goods orders. On the other hand, Thursday’s Q1 GDP release is forecasted to reflect an upward revision, which could prove to be a huge boon for the greenback. Meanwhile, euro traders should keep an eye on German labor market figures and those holding Canadian dollar positions should beware of Friday’s Canadian Q1 GDP report.
• US S&P/Case Schiller Home Prices, Consumer Confidence – May 27
On Tuesday, the release of US economic data will likely highlight some of the reasons why traders are ramping up speculation that the country is in midst of a recession. Indeed, at 9:00 EDT, the S&P/Case-Schiller index of home prices is likely to fall sharply for the fifth consecutive quarter in Q1. Later in the morning at 10:00 EDT, the Conference Board’s consumer confidence index is forecasted to fall to a nearly 15-year low of 60.0 from 62.3, which won’t be entirely surprising as rocketing food and energy prices combined with the collapse of the US housing sector and tightening credit conditions have sparked widespread pessimism throughout the financial markets. Furthermore, the labor markets have started to deteriorate, as the unemployment rate has slowly ticked higher in recent months and things are only expected to get worse.
• US Durable Goods Orders – May 28
Can Boeing help the US durable goods orders figure to rebound? Unlikely, as airline orders may actually weigh on the headline reading. For the month of April, Boeing reported only 58 airplane orders, down from 99 in March. While the headline will have the most impact on forex trading, the markets should keep an eye on non-defense capital goods orders excluding aircraft, as this number serves as a leading indicator for business investment. The reading has dropped or stagnated for the past three months, and continued declines will not bode will for US GDP in the second quarter, especially as consumer spending wanes.
• German Unemployment Change – May 29
The German labor markets are expected to post their 28th consecutive month of improvement, as the unemployment change is forecasted to fall by 25,000 to help bring the unemployment rate down to a nearly 16-year low of 7.8 percent. Indeed, tight employment conditions have helped to support the German economy in recent months, as evidenced by a gradual improvement in the services sector since January and overall resilience in the manufacturing sector. This report will hit the wires at 3:55 EDT, and the news tends to spark quite a bit of short-term volatility, especially if the unemployment change misses expectations by a large margin. As a result, those trading the euro, especially against the US dollar, during the European session should keep an eye on the indicator.
• US Q1 GDP Annualized (Revision) – May 29
US GDP is expected to be revised up to 0.9 percent from initial estimates of a 0.6 percent pace in the first quarter. However, if this number deviates from forecasts by any means, the impact on the US dollar will be fast and furious. Given the extent of dour sentiment on the US economy, a surprisingly strong figure could ignite a rally in the greenback. Indeed, the unexpected narrowing of the trade balance during the month of March is anticipated to provide a positive boost to the headline GDP figure, despite the fact that both export and import growth slowed substantially. On the other hand, a disappointing number – or worse, a negative figure – will only exacerbate US recession fears and would weigh on the US dollar significantly.
• Canadian Q1 GDP Annualized – May 30
Expansion in Canada is anticipated to grow at the slowest pace in nearly five years, as Q1 GDP is forecasted to hit a tepid 0.4 percent, down from 0.8 percent in Q4 2007. The culprit? The sharp economic slowdown in the US. As a massive importer of foreign goods, the health of the US economy tends to be important for most exporting countries. However, the US is the biggest importer of Canadian goods, making the health of the Canadian economy particularly dependent on their southern neighbor.
See the DailyFX Calendar for a full list and timetable of upcoming event risks.
