Below are the most important global events likely to affect FX and bond markets in the coming week starting Monday April 1.
The start of a new quarter is set to be relatively quiet due to holidays on Monday across much of Europe and some parts of Asia. U.S. monthly jobs data will likely be the highlight of the week as investors anticipate that the Federal Reserve will cut interest rates over the coming months, while in Europe investors will pay close attention to German inflation figures.
In Asia, attention will focus on PMI readings for over 10 countries, including China and Japan, a central bank decision in India, and meeting minutes and speeches from Australia's central bank. Inflation prints from the Philippines, Indonesia, Thailand and South Korea also feature.
U.S.
U.S. monthly jobs data for March due on April 5 will be watched closely, with non-farm payrolls growth expected to fall following a 275,000 rise in February. A particularly weak reading could see the dollar and U.S. Treasury yields fall while equities rise.
The Federal Reserve confirmed at its meeting in March that interest-rate cuts are on their way and reiterated its forecast for three rate cuts this year. Most expect a first rate cut to come in either June or July, with U.S. money markets currently only fully priced for a July cut. The exact timing will likely depend on the extent to which inflation and jobs growth slow.
"We continue to expect the pace of job growth to slow in the coming months," analysts at Citi said in a note, adding that they expect payrolls growth of 100,000-150,000 in March.
Ahead of this data, investors will look for further clues on the health of the U.S. labor market via ADP private payrolls data for March on Wednesday, JOLTs job opening figures on Tuesday and weekly jobless claims on Thursday.
Other data to watch will be the ISM manufacturing and services PMI readings on Monday and Wednesday respectively, U.S. February factory orders on Tuesday and U.S. February trade data on Thursday.
CANADA
Canadian jobs data for March released on April 5 will be watched as a gauge of when the Bank of Canada will start cutting interest rates.
Recent data for February showed a second consecutive surprise deceleration in Canadian inflation, which led economists and traders to ramp up expectations that the Bank of Canada would begin cutting its policy rate, now at 5%, in June.
The jobs data will be watched in the context of recent comments by Deputy BOC Governor Toni Gravelle, who cautioned that inflation figures were a single data point, and that senior officials will "try to understand what it means in aggregate across previous consumer-price index numbers and other macroeconomic data."
Canadian trade data for February are also due for release on Thursday.
EUROZONE
The European Central Bank is expected to start cutting interest rates in either June or July. The timing of this, plus how fast and how far rates will fall after that, will depend on how quickly inflation falls and on how healthy the economy is.
The provisional estimate for German inflation in March due on Tuesday is likely to attract the biggest focus of the week. Headline annual CPI inflation is expected to fall further toward the ECB's 2.0% target, though policymakers are keeping a particularly close eye on core inflation, which strips out volatile items such as food and energy and has remained stubbornly high of late.
"The last mile in the disinflation process that lies ahead of us is likely be relatively bumpy, not least because one-off/temporary factors are set to affect the CPI inflation dynamics in the near term," Deutsche Bank senior economist Sebastian Becker said in a note.
Provisional March inflation figures for the Netherlands will be released on Wednesday, while eurozone producer prices data for February on Thursday will give clues on pipeline inflationary pressures.
On April 5, eurozone retail sales, German manufacturing orders and French industrial production--all for February--will be watched for indications on whether the eurozone's tentative recovery is gaining traction. Final purchasing managers' surveys for the eurozone and for individual eurozone countries will also be released for manufacturing on Tuesday and for services on Thursday.
Eurozone bond issuance will include Germany conducting a two-year Schatz auction on Tuesday and a 10-year Bund auction on Wednesday, while Spain and France will sell bonds on Thursday. In Scandinavia, Denmark will hold an auction on Wednesday.
U.K.
In an otherwise quiet week for U.K. data after the long Easter weekend, U.K. mortgage lending and credit data for February on Tuesday will be watched to assess the health of the housing market amid higher interest rates, as well as the extent to which consumers are accessing credit in order to increase spending. Nationwide's more up-to-date house-price survey for March is also due on Tuesday.
Final U.K. purchasing managers' surveys for manufacturing will be released on Tuesday and for services on Thursday.
The Debt Management Office is scheduled to auction 10-year gilts on Thursday.
SWITZERLAND
After the Swiss National Bank surprised financial markets by making Switzerland the first advanced economy to cut interest rates, Swiss inflation data for March on Thursday could attract closer attention than usual. A weak reading would likely increase expectations that the SNB will implement another rate cut at its next meeting in June.
CENTRAL AND EASTERN EUROPE
Interest-rate decisions are due in Poland and Romania on Thursday.
CHINA
The week in China opens in the wake of official PMI readings covering manufacturing, services and construction released on Sunday. Investors will be looking to see if private gauges on Monday and Wednesday point in the same direction.
Positive readings could add to recent signs that the economy is turning a corner, dispelling some of the pessimism about the slow, uneven pace of recovery that has become entrenched among many market watchers.
Citi economists have upgraded their forecast for China's 2024 GDP expansion to 5.0% from 4.6%, citing recent improved policy delivery and upbeat consumption and investment data. The bank's economists also see signs of property stabilization.
JAPAN
After a flood of data last week, Japan economy watchers will look to the central bank's Tankan Survey for 1Q due on Monday. The survey, which compiles companies' sentiments toward business conditions, will show whether Japan's large manufacturers remain upbeat at the start of 2024 and shed light into their outlook.
The survey will also show forecasts for the yen, which has been in the spotlight after depreciating sharply versus the U.S. dollar in the wake of the BOJ's exit from negative interest rates. The yen recently tested lows against the greenback which were last seen in the 1990s, spurring the Japanese authorities to express their discomfort with the currency's swift depreciation and to warn of possible measures to counter "disorderly" foreign-exchange movements.
February household spending figures, which have been on an extended run of contraction are due on April 5.
AUSTRALIA
In Australia, the release on Tuesday of the Reserve Bank of Australia's latest policy meeting minutes will take center stage.
Following the March 18-19 meeting, RBA Governor Michele Bullock wouldn't be drawn on whether an interest rate cut was considered by the board, but said that all policy options were on the table. The minutes are expected to provide some clarity on the issue.
If it becomes clear that RBA policy makers only considered increasing or maintaining the official cash rate at 4.35%, markets might conclude that the RBA didn't move the policy needle as far toward neutral as many economists think.
A few of the RBA's assistant governors will also make speeches during the week.
A speech from Chris Kent, the assistant governor for financial markets at the RBA, will be worth watching on Tuesday, as he might comment on recent data that showed a big fall in the unemployment rate.
If the February employment numbers are indeed a true reflection of the job market, it would probably push market bets on the timing of the first interest-rate cut from late this year into 2025.
There is also a swathe of data due, with house prices and job advertisement numbers on Tuesday likely to garner the most attention.
INDIA
The Reserve Bank of India is widely expected to stay on the policy sidelines on April 5, as inflation stays above target and economic growth robust.
HSBC thinks the bar for easing has been raised, at least for now.
At its last policy meeting, the RBI said its policy stance needs to be viewed in the context of above-target inflation, and the incomplete transmission of previous rate hikes, said Pranjul Bhandari, HSBC's chief economist for India and Indonesia.
HSBC expects a shallow rate-cutting cycle to start in mid-2024, but only once the Fed starts easing. UOB's Global Economics & Markets Research team thinks RBI will keep policy rates unchanged for some time to anchor disinflation, with a 25-basis-point rate cut in the October-December quarter plausible.
The decision will follow PMI data on Tuesday, that Capital Economics expects will show continued expansion in both manufacturing and services.
The rupee will also be in focus, after hitting fresh lows during the final week of March.
"USD/INR has been under some pressure over the last few sessions," Nomura research analyst Nathan Sribalasundaram said. The FX weakness spilled over into the bond market last week, and Nomura expects more volatility if the currency remains under pressure, noting that foreign portfolio investment flows have been strong, and largely unhedged.
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03-28-24 0934ET
