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The last trading week was shorter due to Easter Monday in Catholic countries. Banks were closed in Catholic countries that day. In the coming week (08.04.2024 – 14.04.2024), the focus of market participants will be on fresh inflation data in the US, as well as the results of the meetings of the ECB, the RB of New Zealand and the Bank of Canada.
The dollar remains stable in general and has positive dynamics, while market participants are evaluating the results of the March Fed meeting and the prospects for its monetary policy, as well as March data from the American labor market.
At the same time, investors still expect 3 interest rate cuts by the end of the year.
It is also worth noting that from Saturday to Sunday, April 7, Australia and New Zealand will switch to winter daylight saving time: their clock will be set back 1 hour.
Note: During the coming week, new events may be added to the calendar and / or some scheduled events may be cancelled. Time is GMT
Monday, April 8
No important macro statistics scheduled to be released. However participants who follow the dynamics of the franc might want to hear the speech (at 15:15 GMT) by the head of the Swiss National Bank Thomas Jordan. During his speech, volatility in the franc quotes increases, and traders are waiting for signals regarding the further plans of the SNB’s monetary policy. The Central Bank of Switzerland has previously consistently advocated for a soft monetary policy in the country, and considered the exchange rate of the national currency to be “overvalued.” Now the situation is somewhat different, especially given the slowing inflation in the country.
Tough rhetoric of Jordan’s speech will help strengthen the franc. A soft tone of the speech and the SNB’s tendency to pursue a soft monetary policy will have a negative impact on the franc.
Tuesday, April 9
08:00 EUR Eurozone Bank Lending Study
This is a study of the state of the bank lending system conducted by EU financial experts 4 times a year. The main goal of the study is to obtain expanded information about the conditions of bank lending in the Eurozone.
The data obtained is used by the ECB management when making decisions on the bank’s monetary policy. This report may cause increased volatility in the euro prices and the European stock market at the time of its publication if it contains unexpected findings regarding lending conditions for businesses and households in the Eurozone.
Wednesday, April 10
02:00 NZDRB of New Zealand’s interest rate decision. Accompanying statement. RBNZ’s monetary policy statement
Following the meetings held in October and November 2021, the Reserve Bank of New Zealand (for the first time in 7 years) raised the key interest rate to 0.50% and then to 0.75%. The interest rate was raised again to 1.5% in February and April 2022 to ease inflation and contain rapidly rising house prices. Currently the RBNZ interest rate is 5.50%.
The RBNZ previously stated that the economy no longer needed the current level of monetary stimulus.
At this meeting, the RBNZ may either raise the interest rate again, and its leaders may also speak out in favor of further increasing the interest rate at subsequent meetings, or leave the rate at the current level. Market participants monitoring the NZD quotes should be prepared for a sharp increase in volatility during this time period.
In the accompanying statement and comments, the RBNZ management will provide an explanation of the interest rate decision and comment on the economic conditions that contributed to this decision.
At this time, volatility in New Zealand dollar quotes may increase sharply.
Note that at the end of the July 2023 meeting, the leaders of the Central Bank of New Zealand kept the interest rate at 5.50%. This was the first pause since the RBNZ began tightening monetary policy in August 2021. In the accompanying statement, the RBNZ noted that the current parameters of monetary policy are already restrictive.
12:30 USD Consumer price indices
Consumer Price Index (CPI) determines changes in the prices of a selected basket of goods and services over a given period and is a key indicator for assessing inflation and changes in consumer preferences. Food and energy are excluded from Core CPI to provide a more accurate estimate.
A high result strengthens the US dollar because the likelihood of a Fed rate hike increases, while a low result weakens it.
Previous values (annualized):
- CPI: +3.2%, +3.1%, +3.4%, +3.1% +3.2%, +3.7%, +3.7%, +3.2%, + 3.0%, +4.0%, +4.9%, +5.0%, +6.0%, +6.4% (in January 2023),
- Core CPI: +3.8%, +3.9%, +3.9%, +4.0%, +4.0%, +4.1%, +4.3%, +4.7% , +4.8%, +5.3%, +5.5%, +5.6%, +5.5%, +5.6% (in January 2023)
The presented data indicate a continuing slowdown in consumer inflation. It’s also well below the level of 2022, when annual US inflation hit a 40-year high of 9.1% in June. On the other hand, the US inflation is still well above the Fed’s target level of 2%, which will force US Central Bank officials to maintain interest rates at high levels.
If the data is confirmed or turns out to be weaker than forecast, the dollar will most likely react with a short-term decline. Stronger-than-expected data will strengthen the dollar, as it will increase the likelihood of the Fed keeping interest rates at high levels for a longer period of time.
13:45 CAD Bank of Canada’s interest rate decision. Accompanying statement from the Bank of Canada
Following meetings held in 2022 and 2023, the Bank of Canada decided to increase the interest rate (to 5.00% currently) and spoke out in favor of further increases.
However, since the September 2023 meeting, Bank of Canada policymakers have kept the interest rate at 5.00%.
They also recognized that the uncertainty caused by high geopolitical tensions in the world, as well as the slowdown of the world’s largest economies (Chinese, American, European), which will be accompanied by a decrease in demand for oil, Canada’s main export, could weaken economic growth with still high inflation.
It is possible that the Bank of Canada will take a break again at its meeting on Wednesday.
Tough tone of the Bank of Canada’s accompanying statement regarding rising inflation and the prospect of further tightening of monetary policy will cause the Canadian dollar to strengthen. If the Bank of Canada signals the need for loose monetary policy, the Canadian currency will decline.
14:00 CAD Report of the Monetary Policy Committee of the Bank of Canada
The Bank of Canada’s Monetary Policy Committee will make its next quarterly report on current monetary policy issues, containing information on changes in monetary policy. In this report, representatives of the Bank of Canada will explain the bank’s position and assess the current economic situation in the country. Tough tone of the report will cause the Canadian dollar to strengthen. If the Bank of Canada signals any plans to extend the period of loose monetary policy, the Canadian currency will decline.
15:30 CAD Press conference of the Bank of Canada
During the press conference, head of the Bank of Canada Tiff Macklem will explain the bank’s position and assess the current economic situation in the country. If the tone of his speech is tough regarding the monetary policy of the Bank of Canada, the Canadian dollar will strengthen in the foreign exchange market. If Macklem speaks out in favor of loose monetary policy, the Canadian currency will decline. In any case, high volatility in the CAD quotes is expected during his speech.
18:00 USD Minutes of the March meeting of the Federal Open Market Committee
The publication of the minutes is extremely important for determining the course of the current Fed policy and the prospects for raising interest rates in the United States. The volatility of trading in financial markets during the publication of the minutes usually increases, since the text of the minutes often contains either changes or clarifying details regarding the results of the last FOMC meeting.
Following the meeting that ended on March 20, 2024, central bank leaders decided to keep the federal funds rate unchanged in the range of 5.25% – 5.50%.
The accompanying statement said the Fed does not believe it would be appropriate to cut rates until there is greater confidence that inflation is moving sustainably toward its 2% target. “The decline in inflation numbers is welcome, but we need to see further evidence that we are returning to target,” and “if necessary, we (at the Fed) are prepared to maintain the current rate for longer,” the Fed Chairman Jerome Powell said at the press conference following the recent meeting.
Market expectations regarding the Fed’s June interest rate cut have diminished. They have now shifted mainly to the 2nd half of the year, although markets still expect 3 interest rate cuts this year.
The soft tone of the minutes will have a positive impact on stock indices and a negative impact on the US dollar. Tough rhetoric from Fed officials regarding the outlook for monetary policy could push the dollar higher.
Thursday, April 11
01:30 CNY Consumer Price Index (CPI)
The National Bureau of Statistics of China will present regular monthly data reflecting the dynamics of consumer prices in China. Rising consumer prices could trigger an acceleration in inflation, which could force the People’s Bank of China to take measures aimed at tightening fiscal policy. Increased growth in consumer inflation may cause the yuan to appreciate, and a weak result will put pressure on the yuan.
China’s economy is the second largest in the world after America’s. Therefore, the publication of important macroeconomic indicators of this country has a noticeable impact on global financial markets, primarily on the positions of the yuan, other Asian currencies, the dollar, commodity currencies, as well as on Chinese and Asian stock indices. China is the largest buyer of raw materials and a supplier of a wide range of finished products to the global commodity market.
In February 2024, the value of the consumer inflation index was +1.0% (+4.3% in annual terms) after +0.1% (-2.7% in annual terms) in December 2023, -0.5% (-0.5% in annual terms) in November, +0.2% (0% in annual terms) in September, in July +0.3% (+0.1% in annual terms), in June -0 .2% (0% in annual terms), in May -0.2% (+0.2% in annual terms).
Data indicate an acceleration of inflation in the country. An increase in the consumer inflation index will have a positive effect on the quotations of the yuan, as well as commodity currencies. However, worse-than-forecast data and a relative decline in CPI may have a negative impact on them. This applies to a greater extent to the Australian dollar, since China is Australia’s largest trade and economic partner.
12:15 EUR ECB rate decision
The ECB will publish its decision on the key rate and the deposit rate. The ECB’s tough position on inflation and the level of key interest rates helps to strengthen the euro, while a soft position and rate cuts weaken the euro. Given the high level of inflation in the Eurozone, according to the ECB management, the balance of risks to the economic prospects of the Eurozone “remains biased in the negative direction.”
According to the ECB leaders, “inflation is still high” and “the ECB intends to reduce it to 2% in a timely manner.”
The ECB believes that GPP growth may decline due to the energy crisis in the EU, high uncertainty, weakening global economic activity, and tightening financing conditions. However, the recession should not drag on too long, although strong growth should not be expected either.
Thus, if we follow these signals from the ECB leaders, at the end of this meeting the key interest rate and the ECB rate on deposits for commercial banks will remain at the same level. Although, the option of a tougher decision and an increase in interest rates, up to 4.75% and 4.25%, respectively, or a pause in increases cannot be ruled out.
This decision (pause) is supported, for example, by the fact that consumer inflation in the Eurozone is still gradually slowing down, while the threat of recession in the region remains.
12:30 USD Producer Price Index (PPI)
Producer Price Index estimates the average change in wholesale prices determined by manufacturers at all stages of production. It is one of the leading measures of inflation in the United States measuring the average change in wholesale producer prices.
As rising production costs increase wholesale prices, this ultimately increases consumer inflation. An increase in inflation (in normal economic conditions) usually puts upward pressure on the quotes of the national currency, since it implies a tighter monetary policy of the Central Bank.
Previous values: +0.6% (+1.6% in annual terms) in March, +0.3% (+0.9% in annual terms) in February, -0.1% (+1.0% in annual terms) in January 2024, 0% (+0.9% in annual terms) in December 2023, -0.5% (+1.3% in annual terms), +0.5% (+2 .2% in annual terms), +0.7% (+1.6% in annual terms), +0.3% (+0.8% in annual terms), +0.1% (+0.2 % in annual terms), -0.3% (+0.9% in annual terms), +0.2% (+2.3% in annual terms), -0.5% (+2.7% in annual terms), -0.1% (+4.9% in annual terms), +0.7% (+5.7% in annual terms) in January 2023.
If the data turns out to be better than expected (above forecast values), the dollar is likely to strengthen. And, conversely, data below the forecast and previous values will put pressure on the Fed when it makes its next decision on monetary policy in the direction of easing, which will have a negative impact on the dollar.
12:45 EUR ECB press conference. ECB monetary policy statement
The press conference will be of primary interest to market participants. During this process, a surge in volatility is possible not only in euro quotes, but throughout the entire financial market if the ECB leaders make unexpected statements. The ECB leaders will assess the current economic situation in the Eurozone and comment on the bank’s decision on rates. In previous years, following the results of some ECB meetings and subsequent press conferences, the euro exchange rate moved by 3%-5% in a short time.
A soft tone of the statements will have a negative impact on the euro. Conversely, a tough tone from the ECB leaders regarding the central bank’s monetary policy will strengthen the euro.
Friday, April 12
06:00 EUR Harmonized Index of Consumer Prices (HICP) in Germany (final estimate)
This index is published by the EU Statistics Office and is calculated on the basis of statistical method agreed between all EU countries. It is an indicator for assessing inflation and is used by the Governing Council of the ECB to assess the level of price stability. A positive result strengthens the EUR, a negative result weakens it.
Previous indicator values: +2.7%, +3.1% in January 2024, +3.8% in December, +2.3% in November, +3.0% in October, +4.3% in September, +6.4% in August, +6.5% in July, +6.8% in June, +6.3% in May, +7.6% in April, +7.8% in March, +9.3% in February, +9.2% in January, +9.6% in December, +11.3% in November, +11.6% in October, +10.9% in September, +8 .8% in August, +8.5% in July, +8.2% in June, +8.7% in May, +7.8% in April, +7.6% in March, +5.5 % in February, +5.1% in January 2022 (annualized).
The data suggests inflation in Germany continues to slow, which in turn puts pressure on the ECB to ease its monetary policy. Data weaker than the previous value will likely have a negative impact on the euro. And, conversely, the resumption of inflation growth could provoke a strengthening of the euro. The growth of the indicator is a positive factor for the euro. If the data for March turns out to be better than previous values, the euro may strengthen in the short term.
14:00 USD University of Michigan Consumer Confidence Index (preliminary release)
This indicator reflects the confidence of American consumers in the country’s economic development. A high level indicates economic growth, while a low level indicates stagnation. Previous indicator values: 79.4 in March, 76.9 in February, 79.0 in January 2024, 69.7 in December 2023, 61.3 in November, 63.8 in October, 68.1 in September, 69.5 in August, 71.6 in July, 64.4 in June, 59.2 in May, 63.5 in April, 62.0 in March, 67.0 in February, 64.9 in January 2023, 59.7 in December, 56.8 in November, 59.9 in October, 58.6 in September, 58.2 in August, 51.5 in July, 50.0 in June, 58.4 in May, 65, 2 in April, 59.4 in March, 62.8 in February, 67.2 in January 2022. An increase in the indicator will strengthen the USD, and a decrease in the value will weaken the dollar. Data indicate an uneven recovery of this indicator, which is negative for the USD. Data worse than previous values may have a negative impact on the dollar in the short term.
Price chart of EURUSD in real time mode
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