The dollar saw a broad-based rally against the majors last week despite the ongoing tariff uncertainty. CAD, EUR, and CHF outperformed while JPY, NOK, and AUD underperformed. We believe the gains were exaggerated by skewed positioning, with weakness likely to resume this week as the dust settles. Key data this week should show that the U.S. economy is feeling the impact of the tariffs and tariff uncertainty.

AMERICAS

Fed Beige Book will be released Wednesday. The Beige Book will offer more insights on how trade policy uncertainty is affecting economic activity. According to the April Fed Beige Book, which was based on information collected on or before April 14, “the outlook in several Districts worsened considerably as economic uncertainty, particularly surrounding tariffs, rose.” The odds of a June cut have fallen to 5%, 30% in July, and 90% in September. Looking ahead, the swaps market is pricing in between 75-100 bp of total easing over the next 12 month, down from 125 bp priced in earlier this month.

Fed Chair Powell speaks Monday. Powell will likely stick to the wait-and-see policy script. Logan and Goolsbee also speak Monday. Goolsbee, Cook, and Logan speak Tuesday. Bostic and Cook speak Wednesday. Kugler and Harker speak Thursday. At midnight Friday, the media blackout begins and there will be no Fed speakers until Chair Powell’s post-decision press conference June 17.

May jobs report Friday will be the data highlight. Bloomberg consensus for NFP is 130k vs. 177k in April, while its whisper number is 143k. Both would be consistent with a relatively healthy labor market. For reference, payroll job gains averaged 152k per month over the past 12 months while the breakeven pace of job gains needed to keep the unemployment rate stable is between 80k and 100k. The unemployment rate is expected to remain steady at 4.2% which would track below the Fed’s 2025 projection of 4.4%, while average hourly earnings are expected to slow two ticks to 3.6% y/y. Overall, wage growth is running around sustainable rates consistent with the Fed’s 2% inflation target given annual non-farm productivity growth of around 2%. Ahead of the jobs data, ADP reports its private sector jobs estimate Wednesday and is expected at 110k vs. 62k in April.

April JOLTS data will be reported Tuesday. Job openings are expected at 7100k vs. 7192k in March which would be the lowest since December 2020. In March, the job openings rate ticked down 0.2 ppt to 4.3%, below the 4.5% level that typically precedes a sharp rise in unemployment. However, other details were less alarming. The layoffs rate dipped 0.1 ppt to 1.0% in March, the hirings rate was unchanged at 3.4% for a fourth consecutive month, and the quits rate increased 0.1 ppt to 2.1%. Overall, the labor market looks to be roughly in balance and is not a source of inflationary pressures. May Challenger layoffs and weekly claims will be reported Thursday.

May ISM PMIs will be important. Manufacturing will be reported Monday and the headline is expected at 49.2 vs. 48.7 in April. The regional Fed ISM manufacturing prints suggest risks are skewed to the upside. Of note, S&P Global manufacturing PMI rose 2.1 points to a three-month high of 52.3 in May.

Services PMI will be reported Wednesday. Headline is expected at 52.0 vs. 51.6 in April. The regional Fed ISM services prints suggest risks are skewed to the upside. Of note, S&P Global services PMI increased 1.5 points to a two-month high of 52.3 in May.

April trade data will be reported Thursday. The deficit in goods and services is expected to narrow to -$117.3 bln after widening to a record -$140.5 bln in March as firms ramped up imports ahead of tariffs. Of note, the advance goods deficit narrowed to -$87.6 bln vs. -$162.3 bln in March.

Bank of Canada meets Wednesday and is expected to cut rates 25 bp to 2.5%. However, the market is split; 12 of the 30 analysts polled by Bloomberg look for steady rates, while the swaps market only sees around 20% odds of a cut. Canada risks entering a period of stagflation which complicates the BOC’s easing path. Core CPI inflation ran hot in April, while the BOC’s scenario analysis shows Canada’s real GDP growth either stalling in Q2 or contracting over the remainder of 2025. The next quarterly Monetary Policy Report is due at the July 30 meeting. Looking ahead, the swaps market is pricing in around 50 bp of total easing over the next 12 months.

Canada also reports May jobs data Friday. Consensus sees -10.0k jobs vs. 7.4k in April, while the unemployment rate is expected to rise a tick to 7.0%. Manufacturing was the biggest drag on employment in April due to trade uncertainty at -31k, the biggest monthly decline in five years. While trade tension between the US and Canada may have peaked, trade policy uncertainty remains high and the labor market looks set to weaken further.

Canada reports May PMIs this week. S&P Global manufacturing PMI will be reported Monday. Its services and composite PMIs will be reported Wednesday. Ivey PMI will be reported Thursday.

EUROPE/MIDDLE EAST/AFRICA

Eurozone data highlight will be May CPI Tuesday. Headline CPI inflation is expected at 2.0% y/y vs. 2.2% in April and core CPI inflation is expected at 2.4% y/y vs. 2.7% in April. The already released country data for May suggest risks are balanced. France was three ticks lower than expected at 0.6% y/y vs. 0.9% in April while Spain was one tick lower than expected at 1.9% y/y vs. 2.2% in April. Italy matched consensus at 1.9% y/y vs. 2.0% in April while Germany was one tick higher than expected at 2.1% y/y vs. 2.2% in April.

European Central Bank meets Thursday and is expected to cut rates 25 bp to 2.0%. The ECB will also publish updated macroeconomic projections. At the last meeting April 16-17, the ECB unanimously decided to cut the policy rate by 25 bp to 2.25% as “the disinflation process is well on track” and “the outlook for growth has deteriorated owing to rising trade tensions.” This time around we doubt the decision to cut the policy rate will be unanimous as a few ECB policymakers (Holzmann, Nagel, Müller, and Schnabel) have recently signaled preference for a pause. The swaps market is pricing in 50-75 bp of total easing over the next 12 months that would see the policy rate bottom between 1.50-1.75%.

U.K. highlight will be May DMP inflation expectations Thursday. 1-year expectations fell to 3.1% in April vs. 3.5% expected and 3.4% in March, which reversed the March rise. Elsewhere, 3-year expectations fell three ticks in April to 2.7%, which also reversed the March rise. Both series are still well above their series lows of 2.5% in October 2024 and will likely keep the Bank of England on a cautious easing path. The swaps market is pricing in 50 bp of easing over the next 12 months. Mann speaks Monday. Greene and Breeden speak Thursday.

Switzerland reports May CPI data Tuesday. Headline is expected at -0.1% y/y vs. 0.0% in April, while core is expected at xx% y/y vs. 0.6% in April. Headline inflation is tracking below the Swiss National Bank’s projection of 0.3% over Q2. However, SNB President Schlegel cautioned last week that “the SNB does not necessarily have to react” to negative inflation figures. At its last meeting March 19, the SNB cut rates 25 bp to 0.25% but hinted at little appetite for more easing. Schlegel highlighted that “this rate cut has an expansionary impact. In that sense, the probability of additional policy easing is naturally lower.” The swaps market disagrees and is pricing in nearly 75 bp of total easing over the next six months that would see the policy rate bottom near -0.50%.

Switzerland reports Q1 GDP Monday. Growth is expected at 0.4% q/q vs. 0.2% in Q4, which would be consistent with forward-looking indicators. The KOF Economic Barometer points to growth in line with the historical average, while signals from the manufacturing and services PMI remain mixed. For reference, the Swiss National Bank anticipates real GDP growth of 1.0- 1.5% in 2025.

Sweden reports May CPI data Thursday. Headline is expected to pick up a tick to 0.4% y/y, CPIF is expected to pick up two ticks to 2.5% y/y (Riksbank forecast is 2.3%), and CPIF ex-energy is expected to fall half a ppt to 2.6% y/y (Riskbank forecast is 2.7%). If so, CPIF would move further above the 2% target. At the last meeting May 8, the Riksbank delivered a dovish hold. It kept rates steady at 2.25%, as expected, but warned that more easing may be in the pipeline. The Riksbank stressed that “it is somewhat more probable that inflation will be lower than that it will be higher than in the March forecast. This could suggest a slight easing of monetary policy going forward.” The swaps market is pricing in almost 50 bp of easing over the next 12 months that would see the policy rate bottom near 1.75%.

ASIA

Senior Bank of Japan officials speak. Governor Ueda speaks Tuesday. Deputy Governor Uchida speaks Saturday. Inflation is running hot but the bank remains very cautious about tightening. The swaps market is pricing in 25 bp of tightening over the next 12 months.

Japan highlight will be May cash earnings data Thursday. Nominal cash earnings are expected at 2.6% y/y vs. 2.3% in March while real earnings are projected at -1.5% y/y vs. -1.8% in March. The less volatile scheduled pay growth for full-time workers is forecast at 2.2% y/y vs. 2.1% in March. Overall, Japan wage growth is not a source of significant inflation pressures and validates the Bank of Japan’s very cautious tightening cycle.

Q1 capital spending and company sales and profits Monday will also be important. Spending is expected at 3.8% y/y vs. -0.2% in Q4, while spending ex-software is expected at 5.3% y/y vs. 3.1% in Q4. Sales are expected at 3.0% y/y vs. 2.5% in Q4, while profits are expected at 6.0% y/y vs. 13.5% in Q4.

Reserve Bank of Australia minutes will be released Tuesday. At the May 20 meeting, the RBA delivered a dovish cut. The bank cut rates 25 bp to 3.85%, as was widely expected, but lowered the bar for more easing. First, the RBA stressed that “Inflation is in the target band and upside risks appear to have diminished.” Second, the RBA trimmed its GDP growth and inflation forecasts across most of the projection horizon. Third, Governor Bullock said the rate cut discussion was between 50 bp or 25 bp. Next meeting is July 8 and the market sees around 70% odds of another cut then. Looking ahead, the swaps market is pricing in nearly 100 bp of total easing over the next 12 months.

Australia data highlight will be Q1 GDP Wednesday. Growth is expected at 0.4% q/q vs. 0.6% in Q4. Risks are skewed to the downside as retail sales volume was flat q/q in Q1 and private capital expenditure contracted -0.1% q/q. The Q4 inventories and net exports data Tuesday will offer a clearer picture of the upcoming GDP figure.