The Week Ahead: Fed Rate Path, ECB Decision, BoE Talks, BoC Policy, and More

Bob Mason
Updated: Mar 3, 2024, 02:30 UTC

Key Points:

  • The ISM Services PMI, Fed Chair Powell, and the US Jobs Report will affect bets on an H1 2024 Fed rate cut, the US dollar, and market risk sentiment.
  • Monetary policy moves will draw investor interest, with the Bank of Canada and the ECB in the spotlight.
  • Economic data from China and economic forecasts and policy pledges will impact market risk sentiment.
The Week Ahead

In this article:

The US Dollar

On Tuesday, ISM Non-Manufacturing PMI numbers will kickstart the week for the US dollar. A pickup in service sector activity could delay the timeline for a Fed rate cut. However, investors must consider the sub-components, including prices and employment.

Labor market data will draw investor interest on Wednesday. The ADP employment change and JOLTs Job Openings reports will influence the Fed rate path. Tighter labor market conditions could support wage growth and fuel consumer spending. Upward trends in consumer spending could push consumer price inflation higher.

At the tail end of the week, the labor market remains the focal point. Jobless claims, unit labor costs, and nonfarm productivity numbers are out (Thurs). While the numbers need consideration, the US Jobs Report (Fri) will have more impact. After the hotter-than-expected January report, another surge in nonfarm payrolls and higher wages could cut bets on a June Fed rate hike.

Beyond the numbers, Fed Chair Powell gives testimony on Wednesday and Thursday. Inflation, the US economic outlook, and Fed plans to cut interest rates will be likely topics for discussion.

FOM members Patrick Harker (Mon), Michael Barr (Tues), Mary Daly (Wed), Loretta Mester (Thurs), and Fed Vice Chair John Williams (Fri) are also on the calendar to speak. Views on inflation, the economic outlook, and interest rate cuts would move the dial.


Services PMIs will put the EUR/USD in the spotlight on Tuesday. The services sector contributes over 60% to the euro area economy. An improving service sector environment could ease fears of a Eurozone recession.

Revisions to the Eurozone PMI would need consideration. However, investors must also consider the sub-components, including prices. The services sector is the main contributor to inflation. Higher input prices from wages and selling prices could influence bets on an April ECB rate cut.

On Wednesday, German trade data will garner investor interest. Economic indicators from Germany continue to send red flags about the economy. Weaker trade terms could affect the broader euro area economy.

The German economy is also in focus on Thursday, with factory orders. While the numbers need consideration, the ECB monetary policy decision and press conference will be the main event. Uncertainty remains over the timeline for an ECB rate cut. With economists expecting the ECB to leave interest rates unchanged, the press conference will be the focal point.

On Friday, German industrial production and producer prices will draw investor interest. Producer prices may impact the EUR/USD more. A more marked fall in producer prices could signal a softer demand-inflation outlook. However, Q4 GDP numbers for the Eurozone will also warrant investor attention.

Beyond the numbers, ECB commentary needs monitoring.

The Pound

On Tuesday, UK retail sales will influence the buyer appetite for the Pound. The BRC Retail Sales Monitor will be in focus. Weaker retail sales figures could raise bets on a Bank of England rate cut.

However, finalized private sector PMI numbers for February (Tues) may affect the GBP/USD more. The Services PMI will be the focal point, accounting for over 70% of the UK economy. Investors must consider the headline PMI and the sub-components, including input prices.

On Thursday, UK house prices will also draw investor attention. A pullback in house prices could impact consumer confidence. Downward trends in consumer confidence could affect consumer spending and dampen demand-driven inflation.

Bank of England chatter also needs tracking. BoE Governor Andrew Bailey (Tues) is on the calendar to speak on Thursday.

The Loonie

On Wednesday, the Bank of Canada will influence near-term trends for the Loonie. Economists expect the BoC to leave interest rates at 5%. However, the markets expect the BoC to signal the timeline for an interest rate cut after a more dovish rate statement in January.

Trade data will draw investor interest on Thursday, with labor market data needing consideration on Friday. Weaker trade terms and a higher unemployment rate could raise bets on an H1 2024 BoC rate cut.

The Australian Dollar

On Monday, building approvals and company gross operating profits will impact buyer demand for the  Aussie dollar. The housing sector remains an area of interest, with the interest rate environment affecting the sector. A pickup in housing sector activity could signal an improving Australian macroeconomic environment.

Company gross operating profits will also give investors a bird’s eye view of the economy. However, the numbers are unlikely to influence the RBA Rate Path. Wages, consumption, inflation, and China remain the focal points.

On Wednesday, Q4 GDP numbers and retail sales will draw investor interest. A hotter-than-expected Australian economy could allow the RBA to delay the timeline for a rate cut. Revisions to preliminary retail sales figures would also influence the buyer appetite for the Aussie dollar.

Trade data on Thursday could also affect RBA plans vis-à-vis interest rates. Australia has a trade-to-GDP ratio above 50%. Improving trade terms would support the Australian economy and the Aussie dollar. A pickup in economic activity may signal an upward trend in consumer prices, affecting bets on an RBA rate cut.

The Kiwi Dollar

There are no economic indicators from New Zealand to influence near-term trends for the Kiwi dollar. However, updates from the National People’s Congress and economic data from China will need investor consideration. Services PMI (Tues) and trade data (Thurs) warrant investor attention.

The Japanese Yen

On Monday, capital spending numbers for Q4 will put the Japanese Yen in focus. The Japanese economy unexpectedly contracted in Q4. Upbeat numbers could influence sentiment toward the economy and bets on a Bank of Japan pivot from negative rates.

However, inflation numbers for Tokyo will likely impact the USD/JPY more. A pickup in inflationary pressures could fuel bets on the Bank of Japan exiting negative rates in April. Finalized Services PMI numbers will likely play second fiddle to the inflation report.

On Friday, household spending will also draw investor interest. The Bank of Japan is eyeing household spending to drive demand-driven inflation. A pickup in household spending would support bets on an April BoJ pivot from negative rates.

Beyond the numbers, Bank of Japan commentary also needs consideration. BoJ Board Member Nakagawa is on the calendar to speak on Thursday.

Out of China

On Tuesday, the Caixin Services PMI will influence market risk sentiment. A pullback in service sector activity could pressure Beijing to deliver a meaningful fiscal stimulus package. The services sector accounts for over 50% of the Chinese economy, giving it substantial weightage.

However, trade data for February will also impact market risk sentiment on Thursday. Downward trends in demand may affect riskier assets.

Sensitivity to the numbers will likely depend on messages from Beijing. Lawmakers will gather this week at the National People’s Congress to discuss the economic outlook and policy.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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