The Week Ahead – US Inflation and the BoE in the Spotlight

On the Macro

It’s a quieter week ahead on the economic calendar. However, there are key economic indicators for investors to consider, with the Bank of England also in action.

For the Dollar:

The US CPI Report will move the dial on Wednesday. Following the better-than-expected US Jobs Report, a hotter-than-expected US CPI Report would refuel bets on a June Fed interest rate hike.

On Thursday, wholesale inflation and jobless claims figures will also draw interest before consumer sentiment numbers on Friday.

After the Fed Chair Powell press conference, investors should track FOMC member reactions to the US Jobs Report and the incoming US CPI Report.

For the EUR:

It’s a quieter week for the EUR.

German industrial production and inflation figures will be in focus on Monday and Wednesday. While the production numbers will influence, revisions to prelim inflation numbers will likely have more impact.

Finalized inflation numbers from France and Spain wrap up the week on Friday.

With economic indicators on the light side, investors should track ECB commentary. ECB President Lagarde (Thurs), ECB Chief Economist Philip Lane (Mon/Tues) and ECB Executive Board Members Isabel Schnabel (Tues/Thurs), and Luis de Guindos (Thurs/Fri) are on the calendar to speak this week.

For the Pound:

It is an important week ahead for the Pound. However, investors must wait until Thursday for the Bank of England’s monetary policy decision.

On Friday, the Q1 UK GDP Report will draw interest. Beyond the GDP numbers, manufacturing production and trade data will also influence.

While the economic indicators will influence, the monetary policy decision is the main event. Economists expect the BoE to hike interest rates by 25 basis points on Thursday, with a 7-2 vote in favor of a move.

An in-line-with-expectation move would leave the MPC meeting minutes and BoE Governor Andrew Bailey to move the dial. In March, the UK annual inflation rate stood at 10.1%, pressuring the BoE to deliver more aggressive moves to tame inflation. The BoE inflation, economic growth, and policy outlook will be focal points.

Other stats include BRC Retail Sales Monitor and house price figures that should have a limited impact on the Pound.

With the BoE in focus, investors should monitor BoE commentary. BoE Chief Economist Huw Pill is on the calendar to speak.

For the Loonie:

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

Building Permits on Wednesday should have no impact on the Loonie. However, market risk sentiment and crude oil inventories will influence.

Out of Asia

For the Aussie Dollar:

It is a quiet week ahead for the Aussie Dollar. Business and consumer confidence figures will draw interest on Monday and Tuesday. After the RBA’s surprise rate hike, a pickup in consumer confidence could signal a further pickup in consumer spending. Consumption would support inflation at current levels, an unwanted eventuality for the RBA.

Finalized retail sales figures are also out on Tuesday. Revisions to prelim numbers would garner interest.

For the Kiwi Dollar:

For the Kiwi Dollar, it is a quiet week.

Electronic card retail sales and Business PMI numbers will draw interest on Tuesday and Friday. However, inflation expectation numbers will be the main report on Friday.

For the Japanese Yen:

It is a relatively busy week for the Japanese Yen. On Monday, finalized services PMI numbers will draw interest ahead of household spending figures on Tuesday.

Barring a revision to prelim service PMI numbers, household spending numbers should have more impact.

Out of China

Trade data will move the dial on Tuesday ahead of April inflation figures on Thursday.

We expect both reports to influence market risk sentiment.

Geopolitics

The war in Ukraine and China-Russia relations will remain the focal point, with Taiwan also an area of interest. After comments relating to Alibaba, Huawei, and national security, US-China relations will also be a focal point.