The economic news that will drive the markets during the new week

Global financial markets will focus on this week's U.S. employment report due Friday for further signs of the Federal Reserve's likely rate hike trajectory through the end of the year.

In the euro zone, investors will await monthly inflation data out of the euro zone to assess the timing of when the European Central Bank will start unwinding its massive asset purchase program.
Meanwhile, in the U.K., traders will focus on a pair of reports on activity in the manufacturing and construction sectors for further indications on the continued effect that the Brexit decision is having on the economy.

Investors will also pay close attention to monthly data on China's manufacturing sector, which should provide a health check of the world's second-largest economy at the start of the second quarter.
Elsewhere, market players will be looking to data on Canada's gross domestic product to gauge the health of the economy.

1. U.S. Jobs Report
The U.S. Labor Department will release its May nonfarm payrolls report at 15:30 local time on Friday.

The consensus forecast is that the data will show jobs growth of 185,000 this month, following an increase of 211,000 in April, the unemployment rate is forecast to hold steady at 4.4%, while average hourly earnings are expected to rise 0.2% after gaining 0.3% a month earlier.

Besides the monthly jobs report, this week's holiday-shortened calendar also features U.S. data on manufacturing and service sector growth, consumer confidence, auto sales, personal spending, core PCE inflation, as well as monthly trade figures.

Markets in the U.S. will remain closed on Monday for Memorial Day.

Futures traders are currently pricing in around an 80% chance of a hike at the Fed's June 13-14 meeting, according to Investing.com’s Fed Rate Monitor Tool.

However, market players are no longer convinced that the Fed will be able to raise rates two more times this year, with odds for a second hike by December currently at about 35%.
The median Fed policymaker forecast is for two more rate increases by year-end. But a recent run of disappointing U.S. economic data combined with signs of deepening political turmoil in the White House raised doubts over the Fed's ability to raise rates as much as it would like before the end of the year.

2. Euro Zone Flash Inflation Figures
The euro zone will publish flash inflation figures for May at 12:00 local time on Wednesday.
The consensus forecast is that the report will show consumer prices rose 1.5%, slowing from a gain of 1.9% in April. Core prices are expected to increase 1.0%, easing from a rise of 1.2% in the prior month.

Germany, France, Italy and Spain will produce their own CPI reports throughout the week.
In addition to the inflation data, European Central Bank President Mario Draghi is due to testify about the economy and monetary developments before the Economic and Monetary Affairs Committee, in Brussels, on Monday.

Draghi hinted last week that there would be no changes to monetary policy in the euro area at the ECB's upcoming policy meeting on June 8.

3. U.K. Manufacturing, Construction PMI's
The U.K. will release readings on May manufacturing sector activity at 11:30 local time on Thursday, followed by a report on the construction sector on Friday.

The manufacturing PMI is forecast to dip to 56.5 from 57.3 a month earlier, while construction activity is expected to weaken slightly to 52.7 from 53.1.

Data released last week showed the British economy grew by just 0.2% in the January-March quarter, underlining worries that the economy is slowing just as Prime Minister Theresa May prepares to start negotiations to leave the European Union.

4. Chinese Manufacturing Data
The China Federation of Logistics and Purchasing is to release data on May manufacturing sector activity at 04:00 on Wednesday, amid expectations for a modest decline to 51.0 from 51.2 in the preceding month.

The Caixin manufacturing index, which focuses more on small and mid-sized firms, is due at 0145GMT Thursday (9:45PM ET Wednesday). The survey is expected to inch down to 50.1 from 50.3 a month earlier.
Anything above 50.0 signals expansion, while readings below 50.0 indicate industry contraction.
China's economy grew 6.9% in the first quarter, boosted by higher government infrastructure spending. But growth is expected to slow as policymakers take steps to reduce financial risks in the economy.

5. Canadian Growth Figures
Canada is to release monthly economic growth figures at 15:30 Wednesday. The data is expected to show that the economy expanded 0.2% in March, following a flat reading a month earlier.
On an annualized rate, the economy is forecast to grow 3.6%.

Besides the GDP report, Canada will publish data on the current account and international trade.
The Bank of Canada held interest rates steady at 0.5% last week, saying economic growth was likely to moderate in the second quarter.

Source: Bloomberg Pro Terminal

Jr Trader Alexander Kumanov

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