The Week Ahead – Its All Eyes on the Fed, with the BoE also in Focus

On the Macro

It is a busy week ahead on the economic calendar, with stats 68 due out through the week ending May 6. In the week prior, 56 stats were in focus.

For the Dollar:

It is a big week ahead. On the economic data front, ISM survey PMIs will influence this Monday and Wednesday, with Wednesday’s ISM Non-Manufacturing PMI the main driver.

The US labor market will also be in focus, with the ADP nonfarm employment change figures and official nonfarm numbers due out on Wednesday and Friday.

The main event of the week, however, is the FED’s monetary policy decision. A larger than expected rate hike will spook the markets.

In the week ending April 29, 2022, the Dollar Spot Index surged by 1.72% to end the week at 102.959. In the week prior, the Index rose by 0.72% to 101.22.

For the EUR:

On Monday, manufacturing PMIs and German retail sales will draw interest ahead of German unemployment figures on Tuesday.

On Wednesday, the market attention will shift to service sector PMIs, German trade data, and Eurozone retail sales.

Over the remainder of the week, the German economy will remain in the spotlight. On Thursday, German factory orders are due out ahead of industrial production figures on Friday.

For the week, the EUR slumped by 2.27% to $1.0545. In the previous week, the EUR fell by 0.19% to $1.0790.

For the Pound:

It is a relatively quiet week, with economic data limited to finalized private sector PMI numbers. Expect any revisions to the services PMI to have a greater influence.

Following last week’s tumble, however, the Bank of England monetary policy will be the Pound’s key driver.

In the week, the Pound tumbled by 2.07% to end the week at $1.2573. In the week prior, the Pound slid by 1.69% to $1.2839.

For the Loonie:

Mid-week, trade data will draw interest ahead of employment figures due out on Friday.

On Friday, Ivey PMI numbers for April should have a muted impact on the Loonie.

In the week ending April-29, the Loonie slid by 1.09 to C$1.2848 against the Greenback. In the week prior, the Loonie fell by 0.79% to C$1.2710.

From the Asia Pacific

For the Aussie Dollar:

It is a busy week ahead. Key stats include manufacturing numbers on Monday ahead of retail sales and trade data on Wednesday and Thursday.

While the stats will influence, the RBA monetary policy decision and rate statement will be the key drivers. A larger-than-expected rate hike or the talk of a more aggressive rate path trajectory would support an Aussie Dollar breakout.

At the end of the week, the RBA will also release its Statement on Monetary Policy.

In the week, the Aussie Dollar tumbled by 2.53% to $0.7061.

For the Kiwi Dollar:

On the economic data front, labor market conditions will be in focus. Employment change figures for Q1 and New Zealand’s unemployment rate will be the key stats of the week.

On the monetary policy front, the RBNZ will release its financial stability report on Wednesday and hold a press conference that will likely be the main event of the week.

The Kiwi Dollar ended the week down 2.73% to end the week at $0.6458.

For the Japanese Yen:

It is a quiet week ahead, with stats limited to finalized private sector PMIs and inflation.

We don’t expect the numbers to influence, however, leaving the Yen in the hands of monetary policy divergence.

The Japanese Yen fell by 0.93% to end the week at ¥129.70 against the Dollar.

Out of China

It is another quiet week ahead, with service PMI numbers for April due out on Thursday. Following last week’s assurances of economic support, the markets will be more interested in any chatter from Beijing on how to boost economic activity.

Private sector PMIs from the weekend reflected the need for policy support.

In April, the Caixin Manufacturing PMI fell from 48.1 to 46.0, with the NBS Manufacturing PMI declining from 49.5 to 47.4.

In the week ending April-29, the Chinese Yuan slid by 1.65% to CNY6.6085. The Yuan tumbled by 2.04% to CNY6.5014 in the week prior.

Geo-Politics

Russia and Ukraine will remain the area of focus in the week ahead.