Focus will be on key UK data, including employment and wages, inflation and retail sales with only four weeks before the Bank of England’s policy meeting on 10 th May. In the US, retail sales and industrial output data for March are due for release and FOMC members Bostic, Brainard, Evans, Harker, Kashkari, Mester, Quarles and Williams are due to speak. Markets will be looking for signs of any shift in Federal Reserve thinking and specifically whether the Fed is still on track to hike interest rates twice more this year. In the Eurozone, German business confidence numbers will shed light on whether the Eurozone’s largest economy has continued to lose some of its buoyancy.
Monday 16th April
United States: March retail sales. Retail sales contracted 0.1% month-on- month for three consecutive months despite the strong US labour market and pick-up in wage growth. Consensus forecast is for a modest rebound of 0.4% in March. Weak retail sales have likely kept in check market expectations for Federal Reserve rate hikes and the question now is whether recent tax cuts will start to feed through to US consumer demand and provide some Dollar support.
United States: FOMC members Kaplan, Kashkari and Bostic speak
Tuesday 17th April
China: Q1 2018 GDP. China is one of the first countries to release GDP data for the first quarter. Analysts expect growth unchanged at 6.8% year-on- year and historically growth has come in line with expectations. A number of global forward looking indicators suggest that global GDP growth may have struggled to rise further from around 3.8% year-on- year in Q4 2017, despite the sustained rise in global trade.
UK: February labour data. Focus should be on wage data rather than a headline unemployment rate which is likely to have remained near the multi-year low of 4.3% in January. UK wages, adjusted for inflation, have remained unchanged from a year ago despite the tightness of the UK labour market. This has been attributed to only modest worker productivity, public-sector pay freeze, the prevalence of the “gig” economy and limited bargaining power of a large cohort of part-time workers. Another weak set of wage data may not deter markets from expecting a rate hike in May but signs that wage growth is picking up may see markets cementing their view that the Bank of England will hike rates next month.
Germany: April ZEW economic sentiment index. This German leading indicator is one of the most tracked, along with the Ifo index. Business and consumer confidence has eroded in the Eurozone and Germany in recent months and this was all too apparent in the sharp fall in the German ZEW economic sentiment index in March to 5.1 – the lowest reading since September 2016. This downturn, albeit from high levels, has been blamed on the threat of a US-China trade war, the political backdrop in Germany and the impact of a strong Euro on export competitiveness although German exports remain robust. Declining business
confidence has so far had little impact on the Euro.
United States: March industrial output. Analysts’ consensus forecast is that output rose further in March, albeit more modestly than in February.
United States: FOMC members Williams, Quarles, Harker, Evans and Bostic speak
Wednesday 18th April
UK: March CPI-inflation data. Headline inflation fell to 2.7% yoy in February from a multi-year high of 3.1% yoy in November because of the fading inflationary impact of Sterling’s weakness in the wake of the referendum in mid-2016 as well as tepid wage and consumer demand growth. Analysts expect headline inflation to have remained unchanged at 2.7% yoy due in part to the impact of very cold weather in March. Core CPI-inflation, which strips out food and fuel prices and has remained in a 2.4-2.7% yoy range in the past year, may thus provide a more accurate gage of underlying inflation in the UK. It would likely take some very weak inflation numbers to sway markets seemingly confident that the Bank of England will hike
rates in May.
Eurozone: March CPI-inflation data. Headline inflation rose to 1.4% yoy in March according to the flash estimate and analysts don’t expect any meaningful revisions to the final data. Eurozone inflation has failed to breach 1.5% yoy since February 2017. While this has not stopped the Euro from slowly appreciating, the Eurozone Central Bank has maintained a neutral tone in the face of soft underlying inflation which has in turn seemingly held back a more rapid appreciation in the common currency.
United States: FOMC members Dudley and Quarles speak Thursday 19th April
Australia: March labour data. Australia’s labour market has remained strong, like in the US and US, and analysts are expecting employment to have risen by a further 20,300. But markets, as often the case, are likely to focus on the breakdown between full-time and part-time job creation.
UK: March retail sales data. Growth in the volume of retail sales has been pretty steady at around 1.4% yoy in the past four months and markets may ignore any dip due to unseasonably cold weather in March having kept British consumers at home.
United States: FOMC members Brainard, Quarles and Mester speak
Friday 20th April
United States: FOMC member Williams speaks
