USD
Core component of FED’s preferred inflation measure, PCE, for the month of March came in at 1.6% y/y vs 1.7% y/y as expected.
Following the reading shown in the last week’s GDP inflation surprised to the downside. Personal income came in at 0.1% vs 0.4% as expected but despite that personal consumption came in at 0.9% vs 0.7% as expected.
FED has left the interest rate in the range of 2.25-2.50% as expected. Chairman Powell stated that incoming data, jobs and growth, has been better than expected while inflation was weaker than expected. FED attributed some transitory factors to inflation of 1.5% thus removing concerns about low inflation which gave strength to USD across the markets. It was assessed that global financial conditions have eased and risks around outlook have diminished. He also added that FED doesn’t see a strong case for moving rates in either direction.
Nonfarm payrolls for the month of April came in at 263k vs 190k as expected. The unemployment rate dropped to a historic low of 3.6% vs 3.8% previously but it was achieved on the back of a lower participation rate that came in at 62.8% vs 63% previously. Average hourly earnings were weaker than expected at 0.2% m/m vs 0.3% m/m as expected and 3.2% y/y vs 3.3% y/y as expected. The headline number smashed expectations and it sent USD higher, however upon closer inspection the markets did not take well lower than expected wages and it sent USD back down. Advanced goods trade balance for the month of March came in at -$71.4bn vs -$73bn. Total exports were up 1% while imports were also up 0.9%. Very good trade report showing a narrowing of deficit with both exports and imports rising.
This week we will have trade balance and inflation data.
Important news for USD:
Thursday:
Trade Balance
Exports
Imports
Friday:
CPI
EUR
Final consumer confidence number for April came in at -7.9 as expected while economic confidence continues to fall further coming in at 104 vs 105 as expected. Business climate and industrial confidence also fell short of expectations while services confidence came in lie with expectations at 11.5.
Preliminary Q1 GDP figures show growth of 0.4% q/q vs 0.3% q/q as expected and 1.2% y/y vs 1.1% y/y as expected. Much needed positive data from EU and in combination with unemployment data ticking down to 7.7% as it propped EUR higher. Spain GDP was the main driver coming in at 0.7% q/q and 2.4% y/y. Preliminary CPI figures came in at 1.7% y/y vs 1.6% y/y. Core CPI came in at 1.2% y/y vs 1% y/y as expected thus jumping to six-month high. There is a bit of an upside bias due to the Easter holiday so future reports will provide us more information whether inflationary pressures are sustainable.
Final EU manufacturing PMI for the month of April came in at 47.9 vs 47.8 preliminary and 47.5 in March for the first increase since July of 2018. Small beat was achieved on the back of better PMI from Spain, Italy and France with French PMI coming in at 50, escaping from contraction territory. German PMI number was a bit weaker than preliminary reading suggested indicating that it is still a drag on EU as a whole.
This week we will have final PMI readings for the month of April, consumption data as well as data on factory orders and industrial production from Germany.
Important news for EUR:
Monday:
Markit Services PMI (EU, Germany, France)
Markit Composite PMI (EU, Germany, France)
Retail Sales
Tuesday:
Factory Orders (Germany)
Wednesday:
Industrial Production (Germany)
GBP
Brexit was taken off the agenda for the week which gave more significance to the economic data. In the cross-party talks between the Conservative and the Labour Party, Labour agreed to back second referendum if it can get changes to May’s deal or General Election. Priority will be to look for more concessions on a custom union within the deal and second priority will be holding of General Election.
Manufacturing PMI for the month of April came in at 53.1 as expected. It is down from 55.1 the previous month due to drop in stock purchases from the record highs. New export orders are falling indicating that stockpiling still has a major influence on the number. Construction PMI came in at 50.5 vs 50.3 as expected. Services PMI came in at 50.4 vs 50.3 escaping from contraction territory from the previous month thus pushing the composite PMI to 50.9 vs 50.6 as expected.
BOE left the bank rate unchanged at 0.75% with 0-0-9 votes (0 votes for rate hike, 0 votes for rate cut and 9 votes for no change) as expected. They acknowledge that Q1 GDP is likely boosted by stockpiling and that underlying growth is “slightly stronger” than expected in February. Forecasts for GDP growth have been moved up to 1.5% vs 1.2% previously for 2019, 1.6% vs 1.5% for 2020 and 2.1% vs 1.9% for 2021. Inflation on the other hand is expected to be lower than projected in one year’s time but higher than projected in three years’ time. Governor Carney stated in the press conference that although global tensions have eased UK domestic tensions still remain and added that if forecasts become true rate hikes will be required. Businesses are focused on short-term Brexit plans.
This week we will have Q1 GDP and trade balance data as well as data on construction, industrial and manufacturing production. Brexit will again not be debated in the Parliament.
Important news for GBP:
Friday:
GDP
Industrial Production
Manufacturing Production
Construction Output
Trade Balance
AUD
RBA has said in April’s minutes that rate cut would be appropriate in case of “inflation did not move any higher and unemployment trended up.” Latest inflation data showed inflation falling and although unemployment ticked higher to 5%, it is still stable and trending down. There is about a 40% chance of a rate cut.
PMI data from China for the month of April missed the expectations. Official manufacturing PMI came in at 50.1 vs 50.5 as expected. Output prices and new export orders were only subcategories that were higher than the previous month. Services came in at 54.3 vs 55.0 as expected. Caixin PMI came in at 50.2 vs 50.9 as expected.
This week centre stage will be taken by the RBA rate decision. A rate cut is expected by analysts citing the fact that “inflation did not move higher and unemployment rate trended up”. Recent data coming from Australia were not satisfactory, however RBA is still not pressured to cut rates so they can leave them for now. We will also get trade balance and consumption data from Australia. There will also be Caixin services PMI as well as trade balance and inflation data from China which will provide more information about stimulus effects introduced by Chinese government.
Important news for AUD:
Monday:
Caixin Services PMI (China)
Tuesday:
RBA Interest Rate Decision
RBA Rate Statement
Trade Balance
Exports
Imports
Retail Sales
Wednesday:
Trade Balance (China)
Exports (China)
Imports (China)
Thursday:
CPI (China)
Friday:
RBA Monetary Policy Statement
NZD
Employment report for the Q1 showed employment change coming in at -0.2% q/q vs 0.5% q/q and 1.5% y/y vs 2.2% y/y as expected for a big miss. The unemployment rate ticked down to 4.2% from 4.3%. Participation rate dropped to 70.4 and that lead to drop in the unemployment rate. Average hourly earnings came in at 1.1% q/q vs 0.8% q/q as expected but private wages both including and excluding overtime fell.
This week’s main event will be the RBNZ rate decision. After the employment data rate cut expectations have risen to 55%. Additionally, we will have dairy auction and data on consumption via electronic cards.
Important news for NZD:
Tuesday:
GDT Price Index
Wednesday:
RBNZ Interest Rate Decision
RBNZ Rate Statement
RBNZ Press Conference
Friday:
Electronic Card Retail Sales
CAD
February GDP data came in at -0.1% m/m vs 0% m/m as expected and 1.1% y/y vs 1.4% y/y as expected. Mining and quarrying excluding oil and gas contributed the most to the drop with -4.4%. Transportation and warehousing contributed with -1.6% which is the largest decline since June 2011. Manufacturing PMI for the month of April fell to 49.7 vs 50.5. Production, new orders and employment categories all fell below 50 expansion level. This is the first time Manufacturing PMI fell to contraction territory since February of 2016.
This week we will have speech from Governor Poloz, Ivey PMI, trade balance and employment data.
Important news for CAD:
Monday:
BOC Governor Poloz Speech
Tuesday:
Ivey PMI
Thursday:
Trade Balance
Exports
Imports
Friday:
Employment Change
Unemployment Rate
JPY
Japan was on holiday for the entire week and will be back on Tuesday.
This week we will have PMI data, monetary policy meeting minutes, summary of options as well as data on household spending and earnings.
Important news for JPY:
Tuesday:
Nikkei Manufacturing PMI
Wednesday:
BOJ Monetary Policy Meeting Minutes
Nikkei Services PMI
Friday:
Household Spending
Labour Cash Earnings
BOJ Summary of Opinions
CHF
Retail sales for the month of March came in at -0.7% y/y vs -0.4% y/y as expected. SNB already said that the economy is too fragile for rate hikes and this data point will enforce that stance. Falling consumption will also negatively reflect GDP. Manufacturing PMI for April came in at 48.5 vs 51 as expected for a huge drop in manufacturing activity. This is first drop into contraction territory since December 2015. CPI for the month of April came in 0.2% m/m and 0.7% y/y as expected with core CPI coming in at 0.5% y/y also as expected.
This week we will have employment data.
Important news for CHF:
Wednesday:
Unemployment Rate
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