The Week Ahead: US Inflation, Private Sector PMIs, and the Bank of Japan in Focus

The US Dollar

The private sector will be in the spotlight on Tuesday, with Manufacturing and Services PMIs in focus. Accounting for over 70% of the US economy, the Services PMI will impact the US dollar more. A pickup in service sector activity would further reduce expectations of multiple 2024 Fed rate cuts.

US core durable goods orders will draw investor interest on Wednesday. Economists expect the US to avoid a recession. Better-than-expected numbers would signal a robust US economy.

On Thursday, Q1 GDP and jobless claims figures will garner investor interest. Barring an unexpected spike in US jobless claims, the GDP number will likely have more influence.

The Personal Income and Outlays Report and consumer sentiment numbers will be in focus on Friday. Amid fading bets on multiple Fed rate cuts, the inflation numbers will warrant investor attention. Hotter-than-expected numbers will influence the Fed rate path.

There are no Fed speakers to consider. The Fed entered the blackout period on Saturday, April 20.

The EUR

On Monday, consumer confidence figures for the Eurozone will influence buyer appetite for the  EUR/USD. A pickup in consumer sentiment would align with expectations of an improving macroeconomic environment.

Preliminary private sector PMI numbers for France, Germany, and the Eurozone warrant investor attention on Tuesday. The Services PMIs will likely impact the EUR/USD more, accounting for over 60% of the euro area economy. Investors should also consider the sub-components, including prices, employment, and new orders.

On Wednesday, the Ifo Business Climate Index will draw investor attention. An upward trend would further support expectations of an improving macroeconomic environment.

The German economy will be in the spotlight again on Thursday. German GfK Consumer Climate numbers could signal consumer spending trends.

With rising bets on a June ECB interest rate cut, ECB commentary and the ECB reports also need consideration.

ECB President Christine Lagarde is on the calendar to speak on Monday. ECB Executive Board members Edouard Fernandez-Bollo (Tues), Piero Cipollone (Wed), Anneli Tuominen (Wed), Elizabeth McCaul (Wed), Isabel Schnabel (Wed/Thurs), and Luis de Guindos (Fri) will also deliver speeches.

The ECB will release the Economic Bulletin and Consumer Expectations Survey Results on Thursday and Friday.

The Pound

On Tuesday, UK private sector PMIs will put the Pound in focus. The Services PMI will impact the Pound more, accounting for over 70% of the UK economy. After mixed signals from the Bank of England vis-à-vis interest rate cuts, investors should consider the subcomponents, including prices.

Beyond the numbers, Bank of England speeches also need monitoring. Bank of England Monetary Policy Committee member Jonathan Haskel is on the calendar to speak on Tuesday.

The Loonie

On Monday, housing sector data will put the Loonie in focus. House price trends influence consumer sentiment and spending. Weaker-than-expected figures could signal a pullback in consumer spending and a softer inflation outlook.

Retail sales figures for February also need consideration on Wednesday. Consumer spending trends influence demand-driven inflation and the Bank of Canada interest rate trajectory.

The Australian Dollar

On Monday, Australian inflation numbers for the first quarter will put the Aussie dollar and the RBA in focus. Hotter-than-expected inflation figures could further delay RBA plans to cut interest rates.

Producer prices will also warrant investor attention on Friday. Producers increase prices in a higher-demand environment, passing costs onto consumers.

From elsewhere, economic indicators from China and stimulus chatter from Beijing could also move the dial.

The Kiwi Dollar

There are no economic indicators from New Zealand to influence buyer appetite for the Kiwi dollar.

However, investors should consider economic indicators from China and policy measures to support the Chinese economy.

The Japanese Yen

On Monday, preliminary private sector PMIs for April could influence the Japanese Yen and the Bank of Japan. The Services PMI will likely impact the Japanese Yen more, with the BoJ eyeing the services sector as a contributor to demand-driven inflation.

Inflation figures for Tokyo will warrant investor attention on Friday. Softer-than-expected numbers could enable the BoJ to leave interest rates at zero for longer.

However, the Bank of Japan monetary policy decision and press conference (Fri) will be the focal point. Forward guidance on plans to exit a zero-interest rate environment will influence buyer appetite for the Japanese Yen. Investors should also monitor intervention chatter.

Out of China

On Monday, the PBoC will set the one-year and five-year loan prime rates. Economists expect the PBoC to leave loan prime rates unchanged. A surprise cut to loan prime rates could fuel buyer demand for commodity currencies, including the Aussie dollar, the Kiwi dollar, and the Loonie.