After the services PMI rescued sterling last week, can more good news bolster the Pound once again? UK data takes centre stage this week with consumer inflation and retail sales on Tuesday followed by employment figures on Wednesday.
This week’s main data releases from the US includes, retail sales and inflation, both of which are due on Good Friday. Ahead of these releases a speech by Fed Chair Janet Yellen is on the calendar later today following remarks from FOMC voting member William Dudley last Friday which helped support the US dollar. Dudley said that the Fed’s plan to shrink its balance sheet may result in only a “little pause” in its hiking of interest rates.
On Friday, Non-farm payrolls data revealed that US companies in the private sector created less jobs than expected last month; however, there was a fall in the unemployment rate which suggested that the labour market remains on a strong footing.
The Labour Department reported that nonfarm payrolls rose by a weak 98,000 in March compared to the previous month’s downwardly revised gain of 219,000. Analysts expected the economy to add 174,000 new jobs during the reported period.
Non-farm employment was reportedly hit by the weather-related effects of the big storm that hit the Northeast and Midwest. Meanwhile, the unemployment rate fell to 4.5%, the lowest since May 2007, from 4.7% in February.
Back in March, the Fed raised rates for the first time this year and promised two more hikes in 2017. With the economy expected to bounce back in the second quarter, analysts have pencilled June for the next US rate hike.
Last week in the Eurozone, ECB President Mario Draghi said that the policies of the ECB remain appropriate, suggesting that interest rates will remain lower for longer. This is in direct contrast of the US, which will widen the policy divergence between the Federal Reserve and ECB as the US central bank is expected to continue its hiking cycle. Therefore, as the interest rate differential widens, it will likely weigh on the Euro; especially versus the US Dollar.
Data releases for the week ahead:
9.10 pm – Fed’s Yellen Speech
9.30 am – UK Consumer Price Index (March): price growth expected to be 2.4% YoY and 0.3% MoM, from 2.3% and 0.7% respectively. YoY core price growth forecast to be 1.9%
10.00 am – German ZEW Survey (April): expected to rise to 77.5 from 77.3
2.30 am – China Consumer Price Index & Producer Price Index (March): CPI expected to be 15% YoY and 0.4% MoM, from 0.8% and -0.2% respectively. PPI expected to be 8.4% YoY from 7.8%
9.30 am – UK employment data: February unemployment rate expected to hold at 4.7%, while average hourly earnings (including bonus) expected to rise 2.1% after 2.2% increase a month earlier
3.00 am – China trade balance (March): exports expected to rise by 3.2% after a 1.3% fall last month
1.30 pm – US Producer Price Index (March): PPI expected to rise 2.4% from 2.2% YoY
3.00 pm – US Michigan confidence index (April, preliminary): expected to fall to 95.6 from 96.9
Good Friday – Majority of western markets will be closed in observance of the crucifixion of Jesus
1.30 pm – US Consumer Price Index and retail sales (March)
Casco Financial Services Limited