Key data, namely US durable goods orders, trade balance and GDP and UK GDP, and events – namely the ECB’s policy meeting – come later in the week. Global growth has ticked higher in recent quarters and Chinese growth numbers for Q1 were encouraging. But with mounting concerns about the impact of potential protectionist measures on global trade and growth there will be much focus on the first estimates of the US and in particular UK GDP numbers for Q1. Do not expect fireworks from the ECB but as always the devil could be in the detail of the accompanying policy statement.
Monday 23rd April
Eurozone: April composite PMI. Consensus forecast is for a slight fall to 54.9 from 55.2 in March but the risk is to the downside given the loss of confidence in the Eurozone manufacturing sector. A weak print may not be enough for the Euro to sell off hard but could certainly see the Euro continuing to tread water.
Tuesday 24th April
Australia: Q1 2018 CPI-inflation. The Reserve Bank of Australia has been pretty neutral in recent months on the premise that inflationary pressure are still pretty well contained and analysts expect the various measures of CPI-inflation to have been broadly flat around 1.9% year-on-year. The bigger story for the Australian economy (and by extension the Australian Dollar) remains its ability to capitalise on elevated international commodity prices and rising global trade.
Wednesday 25th April
Australia and New Zealand: ANZAC public holiday
Thursday 26th April
Eurozone: European Central Bank (ECB) policy meeting. The ECB is very unlikely to change its policy rates or even tweak the parameters of its quantitative easing program given that inflation remains subdued and business confidence has rapidly come off the boil. This could be enough for the ECB to renew its admittedly light verbal intervention against the Euro by again flagging concerns about the Euro’s “volatility”.
United States: March durable goods orders. Markets tend to focus on this measure of domestic investment and analysts are expecting headline goods orders, which have historically been quite volatile, to have risen 1% following a 3.1% increase in February.
United States: March trade balance. In the past this was considered a tier-2 data release, at least in terms of its impact on the Federal Reserve’s monetary policy. But President Trump has put a narrowing of the US trade deficit at the heart of his policy program. The deficit has widened for the past five consecutive months, to $57.6bn in February, and another large deficit is only likely to increase President Trump’s resolve to renegotiate the United States’ international trade agreements and renew calls for import tariffs and other protectionist measures.
Friday 27h April
United Kingdom: First estimate of Q1 2018 GDP. This is the only tier-1 data release out of the UK this week but it is an important one in terms of the Monetary Policy Council’s rate hiking path. Some analysts forecast that GDP growth halved in Q1 to 0.2% qoq, which if realised could be weak enough for markets to rethink the odds of a rate hike at the 10th May policy meeting and see Sterling weaken further. At the very least markets could temper their expectations for a second rate hike this year.
United States: First estimate of Q1 2018 GDP. Analysts forecast that GDP growth slowed to 2.0% quarter-on-quarter annualized from a robust 2.9% in Q4 2017 but US GPD data are often revised (and sometimes quite significantly) in the subsequent second and third estimates. So unless the first estimate really surprises on the upside or downside, US markets may ultimately not react much.
Korea: North Korea’s leader, Kim Jong Un, and South Korean President Moon Jae In are due to meet for the first time, paving the way for discussions between Kim Jong Un and US President Trump at some unspecified date in June. Kim Jong Un is reportedly willing to cease nuclear testing and give up North Korea’s nuclear arsenal and according to South Korean officials has dropped demands that the US remove its troops from South Korea, in an apparent significant policy u-turn. However, North Korea’s stature and leverage has been greatly bolstered by reports in late-November that its intercontinental ballistic missiles have the capability of reaching US soil. It is therefore greatly debatable whether Kim Jong Un would be willing to give up his main bargaining chip in exchange for a list of demands that would likely include some form of demilitarisation of the Korean border, an end to economic sanctions and financial assistance.
