Week ahead: Focus on U.S. CPI report and multinational interest rate resolution
The next week's US CPI report and Federal Reserve spokesperson will influence investors' bets on the Fed's interest rate cut in June. In addition, the European Central Bank, Reserve Bank of New Zealand, and Bank of Canada will also announce monetary policy decisions.
Key points:
- U.S. CPI report and Fed spokesman will influence investors' bets on June Fed rate cut.
- ECB, Reserve Bank of New Zealand and Bank of Canada to announce monetary policy decisions.
- China's economy in focus as investors focus on inflation and global terms of trade.
US Dollars
On Monday, the one-year federal consumer inflation expectations data in New York will start a week for the US dollar. The increase in consumer inflation expectations may lead to a decrease in consumer spending, as individuals may adjust their spending plans and expect inflation rates to rise.
The US CPI report released on Wednesday will have a greater impact on the US dollar. Continued inflation may have a significant impact on the Federal Reserve's bet on a rate cut in June.
Due to concerns over inflation, the producer price data released on Thursday will pique investor interest. In an environment of high demand, manufacturers may raise prices and pass them on to consumers. Investors must also consider the US labor market data released on Thursday, as the increase in unemployment in late March exceeded expectations.
On Friday, Michigan consumer confidence data was released. The decline in consumer confidence may indicate a downward trend in consumption and support the view that the Federal Reserve will raise interest rates in June.
Apart from data, the Federal Reserve will be in the spotlight. The response of FOMC members to inflation data is crucial. On Wednesday, the minutes of the FOMC meeting will also be released. However, recent employment reports and inflation data may limit the impact of the minutes on the US dollar.
Euro
On Monday, German industrial production and factory order data will attract investors' attention. The improvement of demand environment may drive buyers' interest in Euro/USD.
Recently, economic indicators from Germany have sent different signals, allowing investors to increase their bets on the European Central Bank's interest rate hike in June. Lower than expected data will comply with the forward-looking guidance of the European Central Bank.
On Thursday, the European Central Bank will be the focus. The market expects the European Central Bank to maintain interest rates unchanged at 4.5%.
Unless the European Central Bank suddenly cuts interest rates, the European Central Bank press conference may have a greater impact on the euro/dollar. Forward looking guidance on the European Central Bank's rate cut schedule and the 2024 interest rate trajectory will influence the market.
On Friday, investors also need to pay attention to the final inflation data for France and Germany. Euro/USD may respond to the revision of preliminary figures.
Pound
On Tuesday, the Retail Sales Monitoring Report from the UK Retail Association may affect buyer demand for the pound. The upward trend in sales may force the market to revise their bets on the Bank of England's monetary policy goals.
On Thursday, the UK real estate industry data and the Bank of England credit status survey will be worth investors' attention. The trend of housing prices may affect consumer confidence and private consumption. The upward trend of private consumption may exacerbate demand driven inflation and affect the interest rate path of the Bank of England.
On Friday, the monthly GDP report will be the focus. The UK economy showed resilience at the beginning of the year. Better than expected GDP data may affect investors' bets on a rate cut by the Bank of England. The trend in the service industry needs to be considered as it is a major component of inflation.
In addition, members of the Monetary Policy Committee of the Bank of England, Sarah Brighton and Megan Green, will both give speeches.
Canadian Dollar
On Wednesday, the Bank of Canada will announce its monetary policy decision for March. Economists predict that the Bank of Canada will keep interest rates unchanged at 5.0%. Unless Bank of Canada unexpectedly cuts interest rates, the focus will be on monetary policy reports and press conferences.
Prospective guidance on the schedule and frequency of interest rate hikes by Canadian banks may influence the market.
The economic data released on Wednesday includes building permits. However, these data will have a weaker impact on the market.
AUD
On Monday, housing loan data will attract the attention of investors. The upward trend of housing loans may indicate an improvement in the macroeconomic environment. However, it is unlikely that housing loans will affect the interest rate path of the Federal Reserve of Australia or the Australian dollar.
On Tuesday, NAB business confidence will become the focus. The decline in business confidence may indicate a contraction in the job market. The deterioration of the labor market situation may affect household spending and suppress consumer spending. The trend of declining consumer spending may lead to a rate cut by the Federal Reserve of Australia.
From other perspectives, economic indicators from China will also affect buyer demand for the Australian dollar.
New Zealand Dollar
On Tuesday, the business confidence data for the first quarter will become the focus. The improvement of business sentiment may indicate an upward trend in investment and employment creation.
However, the New Zealand Federal Reserve's interest rate decision may have a greater impact on the New Zealand dollar. Economists expect the New Zealand Federal Reserve to keep interest rates unchanged at 5.5% on Wednesday. Unless the Federal Reserve of New Zealand unexpectedly cuts interest rates, the focus will be on the interest rate statement. Note that the Federal Reserve of New Zealand will not hold a press conference.
On Friday, the Commercial Purchasing Managers Index and electronic card sales data also need to be monitored. The rebound in consumer spending and the rise in new manufacturing orders will affect buyer demand for the New Zealand dollar.
In addition, economic indicators from China will also affect the New Zealand dollar.
Japanese Yen
On Monday, the average cash income and overtime pay data will be the focus. The impact of February's wage growth data on the Japanese yen may be limited.
However, the consumer confidence and mechanical tool order data released on Tuesday are worth investors' attention.
The rebound in consumer confidence may stimulate consumer spending and demand driven inflation. The signal of an upward trend in private consumption may affect the interest rate trend of the Bank of Japan. Due to the Bank of Japan's cautious attitude towards the macroeconomic environment, it is necessary to consider data on mechanical tool orders.
On Wednesday, the producer price data for March may send a signal to investors about the trend of consumer price inflation. Producers are raising prices in a constantly growing demand environment.
The final data of industrial production in February will also arouse investor interest. We need to consider revising the preliminary data.
In addition to these data, investors must also consider comments from the Bank of Japan and further intervention threats. Bank of Japan Governor Kazuo Ueda will give a speech on Wednesday.
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