The Week Ahead: ECB, PMIs, and China and UK Economies Are in Focus

On the Macro

It’s a busy week ahead on the economic calendar. The UK economy, GDP numbers from China, and prelim April private sector PMIs will be in focus.

For the Dollar:

After a quiet first half of the week, the weekly jobless claims and Philly Fed Manufacturing Index numbers will influence on Thursday. After a larger-than-expected rise in jobless claims last week, another increase would ring recession alarm bells.

On Friday, prelim private sector PMIs for April will also impact market risk sentiment. We expect the services PMI to garner more interest, though investors should consider the sub-components, including prices, employment, and new orders.

While the numbers will influence, we expect FOMC member chatter to dictate demand for the dollar.

For the EUR:

It’s a busy week for the EUR.

German and Eurozone ZEW Economic Sentiment figures and euro area trade data will draw interest on Tuesday. We expect the German ZEW Economic Sentiment numbers to have more influence.

On Wednesday, euro area inflation numbers will provide direction. Upward revisions would support a 50 basis-point ECB interest rate hike.

Eurozone consumer confidence figures on Thursday and prelim private sector PMIs for France, Germany, and the Eurozone on Friday will move the dial.

With the markets second-guessing the ECB’s next policy move, ECB monetary policy meeting minutes will draw interest on Thursday. ECB commentary will also need consideration.

ECB President Lagarde speaks on Monday and Thursday, with ECB Chief Economist Philip Lane in the spotlight on Wednesday. In a busy week, ECB Executive Board Members Luis de Guindos, Isabel Schnabel, and Frank Elderson will also deliver speeches.

For the Pound:

It is a busy week ahead for the Pound. Average earnings, claimant counts, and unemployment figures will influence on Tuesday. On Wednesday, inflation figures for March will give the Bank of England food for thought ahead of retail sales and private sector PMIs on Friday.

Dovish BoE commentary has pegged the GBP/USD back from a return to $1.26. A pick-up in wage growth and inflation and a steady unemployment rate would support another BoE policy move to tame inflation.

However, retail sales and service sector PMI numbers must beat forecasts to support a more hawkish policy outlook.

With the economic calendar on the busier side, investors should also monitor BoE commentary. Monetary Policy Committee members Sir Jon Cunliffe (Mon), Catherine Mann (Wed), and Silvana Tenreyro (Thurs) will deliver speeches.

For the Loonie:

It is a relatively busy week ahead on the economic calendar for the Loonie.

Inflation figures for March will move the dial on Tuesday ahead of retail sales figures on Friday.

Other stats include wholesale sales, housing starts, RMPI, and house price figures. However, we don’t expect the numbers to interest, with market risk sentiment and crude oil prices like to have more impact on the Loonie.

Out of Asia

For the Aussie Dollar:

It is a quiet week ahead for the Aussie Dollar.

On Tuesday, the RBA meeting minutes will have a material influence on the Aussie Dollar.

After the RBA’s April decision to stand pat on interest rates, RBA Governor Philip Lowe warned that a rate pause does not translate into an end to monetary policy tightening. A similar view among Board Members would provide Aussie Dollar support.

On Thursday, business confidence figures will also draw interest.

For the Kiwi Dollar:

For the Kiwi Dollar, it is a quiet week. Inflation figures for Q1 will be in focus on Thursday. Sticky inflation would support the Kiwi Dollar.

While the NZ inflation figures will influence, economic data from China will likely have more impact on the Kiwi Dollar.

For the Japanese Yen:

It is a relatively busy week for the Japanese Yen. Industrial production figures will be in focus ahead of trade data on Thursday and inflation numbers on Friday.

While prelim private sector PMI numbers will also influence, we expect the inflation figures to garner the most interest.

Out of China

It is a busy week ahead, with Q1 GDP and industrial production, fixed asset investments, and retail sales figures in focus on Tuesday.

While the industrial production and retail sales figures are market movers, we expect the Q1 GDP number to have more impact on market risk sentiment.

Weaker-than-expected numbers would weigh on commodities and commodity currencies.

The PBoC will set the three-year and five-year loan prime rates on Thursday.

Geopolitics

The war in Ukraine and China-Russia relations will remain the focal point, with Taiwan also an area of interest.