Below are the most important global events likely to affect FX and bond markets in the coming week starting June 3.

U.S. jobs data will be keenly awaited as investors remain uncertain whether the U.S. economy is slowing sufficiently to allow the Federal Reserve to cut interest rates in the coming months, while the European Central Bank is widely expected to begin lowering rates. The Bank of Canada could also cut rates.

Australia economic growth figures, a stream of PMI data and a central bank decision from India are the main events in Asia, with the latter coming as an election in the world's largest democracy draws to a close.

Inflation prints will gauge progress in central banks' battle with price pressures, with the likes of South Korea and Thailand reporting data for May. China watchers will look at more PMI gauges and trade figures.


U.S.


Focus will turn to evidence on how the U.S. jobs market has fared during May as uncertainty remains regarding when the Federal Reserve will start cutting interest rates.

Friday's non-farm payrolls report will be scruntinized closely. Some clues on job market developments will be provided ahead of that, in the form of JOLTs job openings figures on Tuesday, ADP private payrolls data on Wednesday and weekly jobless claims on Thursday.

"We expect the employment updates to continue to show a slight cooling in U.S. labor market conditions, but from a tight starting point," said Investec analyst Ellie Henderson in a note.

The latest Federal Reserve meeting minutes concluded that it would need to hold interest rates at their current level for longer than previously anticipated after inflation failed to fall in line with expectations, with some officials even open to raising rates if inflation picked up again.

After that, however, weaker revised U.S. first-quarter gross domestic product data reignited prospects that the Fed could start cutting rates as early as September, though that would require further evidence that the economy is slowing.

Other key data include ISM manufacturing PMI figures for May on Monday and ISM data on services on Wednesday, while U.S. factory orders for April are released on Tuesday and April trade figures on Thursday.

"We expect in any case choppy markets over the summer, as the Fed needs a couple of months of weaker data before softening its stance," analysts at SEB Research said in a note.


CANADA


The Bank of Canada will make a rate decision on Wednesday, where an interest-rate cut to 4.75% from 5% is possible but by no means certain, with some analysts expecting that the central bank will wait until July.

"The case can be made for the first BOC rate cut to come either in June or July," Citi analysts said in a note.

"With inconclusive signals from both activity and inflation data, we think the BOC will continue to err on the more hawkish side, waiting for a few more months of sub-3% core inflation to conclude there has been sustained easing in inflation before cutting rates in July."

Analysts at Bank of America Securities expect the central bank to cut interest rates in June "given that core inflation keeps falling and the labor market is softening," though acknowledge a risk that it could wait until July.

They believe the BOC can cut rates even if the U.S. Fed takes longer to cut. Desjardins Securities, however, has scaled back its outlook for rate cuts in Canada due to a weaker Canadian dollar.

Canadian jobs data for May on Friday will also be closely watched, as well as purchasing managers' indexes during the week.


LATIN AMERICA


Brazil releases first-quarter gross domestic product data on Tuesday, while Mexico releases inflation data for May on Friday.


EUROZONE


The European Central Bank will outline a rate decision on Thursday, and is widely expected to make a first 25 basis-point cut to interest rates as inflation is on a declining trend and following strong hints from policymakers, taking the deposit rate down to 3.75% and the refinancing rate to 4.25%.

"The updated inflation forecasts should validate the decision by showing inflation sustainably at target by mid 2025," Barclays analysts said in a note.

A rate cut has been well flagged and attention is expected to focus on any clues about how far and how quickly interest rates will fall after that, particularly as data recently showed eurozone inflation starting to pick up again in May as the economy recovers and wage inflation remains relatively elevated.

May's inflation reading is a warning that next week might not be the start of a traditional cutting cycle, said ING economist Bert Colijn in a note.

"While many forward-looking indicators remain benign, a hot labor market, continued supply-chain disturbances, and a recovery of purchasing power will make for an interesting debate at the ECB," he said.

Katharine Neiss, chief European economist at PGIM Fixed Income, said "data are still murky as to whether domestically generated inflation has returned to a level that leaves headline inflation sustainably at 2%." Rate cuts look imminent but are likely to be "limited and gradual thereafter."

UBS economists expect June's rate cut to be followed by 25 basis-point rate cuts each quarter this year and next year. Barclays similarly expect rate cuts to come once a quarter.

"We judge that the majority of the Governing Council members think of quarterly rate cuts as the natural path of easing at the current stage given elevated uncertainty," Barclays analysts said.

Other data due include final eurozone purchasing managers' data for manufacturing on Monday and services on Wednesday, as well as figures from individual countries. Eurozone producer prices data for April are released on Wednesday, followed by detailed eurozone first-quarter gross domestic product data on Friday.

German unemployment data for May are due on Tuesday, followed by manufacturing orders data for April on Thursday and April industrial production on Friday. In France, industrial production data are released on Wednesday and trade figures on Friday, both for April.

Austria will sell bonds on Tuesday, while Spain and France will conduct auctions on Thursday. Germany will hold two auctions, tapping June 2026-dated Treasury notes, or Schatz, on Tuesday and November 2030-dated Bunds on Wednesday.

European parliamentary elections begin on Thursday, with results due late on Sunday. These are expected to result in an increase in votes for far-right parties.


U.K.


U.K. final purchasing managers' data for manufacturing are due on Monday and for services on Wednesday.

The British Retail Consortium's retail sales monitor is released overnight on Tuesday and will be watched to see whether particularly weak figures in April have continued into May.

"May's BRC figures will help to drive perceptions as to the relative likelihood that April's report was a one-off or marked the start of a new downturn in consumer activity," said Investec economist Philip Shaw in a note.

Real U.K. household disposable income growth has been strong in recent quarters and the GfK consumer confidence index has been recovering, suggesting that retail sales are "currently on an upward trend," he said.

The U.K. is due to auction an October 2063 gilt on Tuesday and a March 2027 gilt on Wednesday.


SWITZERLAND


Swiss inflation data for May are due on Tuesday, which will be closely watched amid uncertainty over whether or not the Swiss National Bank will cut interest rates again at its next meeting on June 20.

Rate-cut prospects dimmed after SNB President Thomas Jordan recently warned there was a risk of higher inflation, stemming particularly from a weak Swiss franc.

"His headlines on the risk of higher inflation have poured some cold water on views that the Swiss National Bank will cut rates again next month," said ING's global head of markets Chris Turner in a note.


SCANDINAVIA


Sweden first-quarter balance of payments data are due on Wednesday.

Denmark is lining up for a bond auction on Tuesday, followed by Norway on Wednesday.


AUSTRALIA


In Australia, attention will be on first-quarter national accounts data on Wednesday, which are expected to show that the economy remains on life support.

Weak spending and falling construction levels are expected to drag growth toward zero in the quarter, compared with growth in the prior quarter of just 0.2%.

If the economy fails to register much of a pulse, the Reserve Bank of Australia could shelve any thoughts it may have of raising interest rates further.

A contraction in the economy would be additionally concerning and feed fears of a coming recession.

Still, the RBA's board is faced with worrying signals that inflation is again rising, despite an economy that's barely growing.

At the start of the week, the Fair Work Commission will outline a rise in the base wage for workers. If the FWC proves more generous than what most economists are expecting, the case for the RBA to raise interest rates further will be strengthened.

The central bank's deputy governor, Andrew Hauser, will speak on Friday to business economists. Hauser is a member of the RBA board and still a relatively unknown quantity for financial markets, as he came to the job just a few months ago.

Any reflections on stubborn inflation risks, sluggish GDP growth or the base wage decision will be watched by bond traders, who are currently pricing in a strong chance of a further rise in interest rates before the end of the year.


ASIA PMIs & CPIs


Monday is PMI day for Asia, taking the pulse of manufacturing activity in China, Japan, South Korea, Taiwan, Singapore and other economies in the region.

S&P Global's April data showed that Asia's manufacturing recovery remains patchy, with output growth cooling and employment dropping in a sign of fragile confidence among manufacturers.

(MORE TO FOLLOW) Dow Jones Newswires

06-02-24 1814ET