Below are the most important global events likely to impact currency and bond markets over the next week starting Monday, April 1st.
The start of the new quarter is expected to be relatively quiet due to Monday being a public holiday in much of Europe and parts of Asia. The monthly U.S. jobs report is likely to be the highlight of the week, as investors expect the Federal Reserve to cut interest rates in coming months, while Europe will focus on Germany's inflation rate. right.
In Asia, attention will be focused on PMI statistics for more than 10 countries including China and Japan, decisions by the Indian central bank, and minutes and speeches from the Australian central bank. His prints of inflatables from the Philippines, Indonesia, Thailand, and Korea are also featured.
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Growth in non-farm employment is expected to decline following February's 275,000 increase, and all eyes will be on the monthly U.S. employment report for March to be released on Friday. Particularly weak indicators could push the dollar and Treasury yields lower while stock prices rise.
The Fed confirmed at its March meeting that rate cuts are underway and reiterated its outlook for three rate cuts this year. Most expect the first rate cut to occur in June or July, and U.S. money markets are only fully pricing in a July rate cut at this point. The exact timing will likely depend on the extent to which inflation and job growth slow.
“We continue to expect the pace of job growth to slow in the coming months,” Citi analysts said in a note, adding that they expect payroll growth to be between 100,000 and 150,000 in March. .
Ahead of this data, investors will look for further clues about the health of the U.S. labor market through Wednesday's March ADP private payrolls data, Tuesday's JOLT job openings and Thursday's weekly unemployment claims numbers.
Other notable data include the ISM Manufacturing PMI and Services PMI, which will be released on Monday and Wednesday, respectively, the US February factory orders on Tuesday, and the US February trade statistics on Thursday.
Canada
Canada's March jobs report, released on Friday, will be closely watched as an indicator of when the Bank of Canada will start cutting interest rates.
Recent February figures showed Canada's inflation rate unexpectedly slowing for the second year in a row, prompting economists and traders to urge the Bank of Canada to cut its policy rate, currently at 5%. Expectations are high that it will start in June.
The employment report will be closely watched in the context of recent comments from BOC Deputy Governor Toni Gravel. He cautioned that the inflation statistics were a single data point and that senior officials “will be trying to understand what that means across the consumer price index so far.” Numerical and other macroeconomic data. ”
Canadian trade statistics for February are also scheduled to be released on Thursday.
eurozone
The European Central Bank is expected to start cutting interest rates in June or July. The timing of this, and the subsequent speed and extent of interest rate declines, will depend on how quickly inflation declines and the health of the economy.
Germany's preliminary inflation forecast for March, to be released on Tuesday, is likely to be the main focus this week. Key annual CPI inflation is expected to decline further towards the ECB's 2.0% target, but policymakers are paying particular attention to core inflation, which excludes volatile items such as food and energy. , which has remained stubbornly high recently.
Sebastian Becker, senior economist at Deutsche Bank, said: “The last mile of the immediate disinflationary process will be difficult to navigate, especially since temporary and transitory factors will influence CPI inflation trends in the short term.'' “There is a high possibility that the situation will be full of ups and downs.” Note.
Preliminary Dutch inflation data for March will be released on Wednesday, while the euro zone's February producer price data will provide clues about pipeline inflation pressures on Thursday.
Eurozone retail sales, German manufacturing orders and French industrial production (all for February) will be closely watched on Friday as indicators of whether the eurozone's tentative recovery is gaining momentum. . The final survey of purchasing managers from the euro area and euro area countries is also due to be released on Tuesday for manufacturing and on Thursday for services.
In eurozone bond sales, Germany will hold a two-year Schatz auction on Tuesday and a 10-year German Bundestag auction on Wednesday, while Spain and France will sell bonds on Thursday. In Scandinavia, Denmark will hold an auction on Wednesday.
England
Amid a quiet week for UK statistics following the Easter long weekend, February UK mortgage lending and credit data released on Tuesday will highlight the health of the housing market amid rising interest rates and consumer confidence. attention will be paid to assess the extent of access. Credit to increase spending. Nationwide's more recent home price survey for March is also scheduled for Tuesday.
The UK Purchasing Officer's final manufacturing survey will be published on Tuesday, and for services on Thursday.
The Debt Management Bureau plans to auction 10-year gold government bonds on Thursday.
Switzerland
Switzerland's inflation data for March could attract more attention than usual on Thursday after the Swiss National Bank surprised financial markets by making Switzerland the first developed country to cut interest rates. Weaker indicators are likely to increase expectations that the SNB will cut rates further at its next meeting in June.
Central and Eastern Europe
Interest rate decisions are scheduled for Thursday in Poland and Romania.
China
China's week begins with the release of official PMI data covering manufacturing, services and construction on Sunday. Investors will be watching to see if Monday's and Wednesday's private indicators point in the same direction.
The positive indicators add to recent signs that the economy is turning a corner, and offset some of the pessimism that persists among many market watchers that the recovery will be slow and uneven. There is a possibility that it will be wiped out.
Citi economists have revised their forecast for China's 2024 GDP expansion upward from 4.6% to 5.0%, citing recent improvements in policy implementation and strong consumption and investment data. The bank's economists also see signs of asset stabilization.
Japan
After a trove of data was released last week, Japanese economy watchers will be keeping an eye on the central bank's Tankan survey for the first quarter, which will be released on Monday. The survey summarizes business sentiment on business conditions and sheds light on the outlook for Japan's major manufacturers, indicating whether they will continue to perform well into early 2024.
The survey also presents the outlook for the yen, which has been attracting attention after plummeting against the dollar following the Bank of Japan's lifting of negative interest rates. The yen has recently tested its lowest point against the dollar since the 1990s, with Japanese authorities expressing displeasure at the rapid yen depreciation and warning of possible measures to counter “disorderly” currency fluctuations. are doing.
On Friday, household spending data for February, which has continued to shrink for a long time, will be released.
Australia
In Australia, all eyes will be on the Reserve Bank of Australia's latest policy meeting minutes released on Tuesday.
After the March 18-19 meeting, RBA Governor Michelle Block did not say whether the board had considered a rate cut, but said all policy options were on the table. It is hoped that the minutes will provide some clarity on this issue.
If it becomes clear that RBA policymakers were only considering raising the official cash rate or keeping it at 4.35%, the market will conclude that the RBA did not move the policy needle in the neutral direction as many economists think. Maybe.
Several RBA assistant governors are also scheduled to speak this week.
RBA Assistant Governor for Financial Markets Chris Kent's speech on Tuesday will be worth watching as he is likely to comment on recent data showing a significant decline in the unemployment rate.
If February's jobs report is indeed an accurate reflection of the job market, the market is likely betting on a first rate cut later this year or into 2025.
There are also a number of data releases scheduled, with home prices and job ad numbers likely to attract the most attention on Tuesday.
India
The Reserve Bank of India is widely expected to keep policy unchanged on Friday, with inflation above target and economic growth strong.
HSBC believes the bar for mitigation has been raised, at least for now.
Pranjul Bhandari, chief economist for India and Indonesia at HSBC, said at its last policy meeting that the RBI needed to reconsider its policy stance in light of higher-than-target inflation and incomplete reflection of past interest rate hikes. He said that there is.
HSBC expects a shallow rate-cutting cycle to begin in mid-2024, but only after the Fed begins easing. UOB's Global Economic and Market Research team believes the RBI may keep policy rates on hold for some time to entrench disinflation and may cut rates by 25 basis points in the October-December quarter.
The decision follows Tuesday's PMI data, with Capital Economics expecting continued expansion in both manufacturing and services.
All eyes will also be on the rupee, which hit a new low in the last week of March.
“USD/INR has been under some pressure the last few times,” said Nomura research analyst Nathan Srivarasundaram. The currency decline has spilled over into the bond market last week, with Nomura noting strong investment flows into foreign securities and largely unhedged, adding that continued currency pressures could lead to further volatility. Expect.
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April 1, 2024 03:14 ET (07:14 GMT)
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