The Week Ahead: US Inflation Numbers Will Keep the Dollar in the Spotlight

The US Dollar

On Monday, housing sector and regional data from Chicago and Dallas will draw investor interest. Recent inflation figures supported an H1 2024 Fed rate cut and expectations of a soft landing. Weaker-than-expected numbers could test the bets on a US soft landing.

On Tuesday, core durable goods orders, house price data, and consumer confidence figures warrant investor attention. Consumer confidence will likely have more impact. A pickup in consumer confidence could fuel consumer spending and demand-driven inflation.

On Thursday, finalized Q4 GDP, jobless claims, and Michigan Consumer Sentiment numbers also need consideration. Tight labor market conditions and better-than-expected consumer sentiment figures could test bets on an H1 2024 Fed rate cut.

However, Core PCE Price and personal income/spending numbers on Friday will influence the Fed rate path. A jump in personal income/spending and a rise in the Core PCE Price Index could cut bets on an H1 2024 Fed rate cut.

Beyond the numbers, FOMC member chatter needs monitoring. Fed Chair Powell is on the calendar to speak on Friday.

The EUR

On Tuesday, German consumer climate figures for April will influence buyer demand for the EUR/USD. Recent German Service Sector data signaled an improving macroeconomic environment. A pickup in consumer confidence could shift the outlook for consumer spending and the economy.

The German economy will be in the spotlight again on Thursday. Retail sales and unemployment figures need consideration. A larger-than-expected fall in retail sales and weaker labor market conditions would support bets on a June ECB rate cut.

On Friday, preliminary inflation numbers for France and Italy will warrant investor attention. Softer-than-expected consumer price trends could further influence bets on a June rate cut.

Beyond the numbers, investors must track ECB member commentary.

The Pound

On Thursday, finalized Q4 GDP numbers will influence buyer appetite for the Pound. However, the numbers will unlikely dictate Bank of England monetary policy goals.

The recent Bank of England monetary policy decision and vote count will likely resonate in the week ahead.

Bank of England Monetary Policy Committee member Catherine Mann is on the calendar to speak on Monday. Views on inflation and the timeline for a BoE rate cut could move the dial.

The Loonie

Market risk sentiment and crude oil prices will influence the Loonie.

However, there are no economic indicators from Canada for investors to consider.

The Australian Dollar

Consumer sentiment numbers for March will draw interest on Tuesday. A pullback in consumer confidence could support bets on an RBA rate cut. However, investors must consider the sub-components, including sentiment toward the economy and time to buy a major household item.

The CPI Monthly Indicator (Wed) and Australian retail sales figures for February (Thurs) will impact the  Aussie dollar. Tighter labor market conditions and a pickup in consumer spending could fuel demand-driven inflation. However, consumer price trends need consideration.

In March, the RBA delivered a less hawkish stance on monetary policy. However, a jump in household spending could change the narrative.

The Kiwi Dollar

Near-term trends for the Kiwi dollar will likely hinge on market risk sentiment and commodity price movements.

There are no economic indicators from New Zealand to consider.

The Japanese Yen

On Monday, the Bank of Japan Monetary Policy Meeting Minutes from February will unlikely influence the Japanese Yen. The BoJ exited negative rates in March, making the February minutes redundant.

However, inflation, unemployment, and retail sales data will move the dial on Friday.

A steady unemployment rate and an upward trend in retail sales could fuel demand-driven inflation. Significantly, a pickup in demand-driven inflationary pressures could test bets on the BoJ holding rates at zero over the near term. Moreover, hotter-than-expected inflation numbers could put the BoJ and the BoJ rate path in the spotlight.

Other stats include industrial production and housing starts. However, these will likely play second fiddle to the unemployment and retail sales figures.

Out of China

There are no economic indicators from China for investors to consider.