By Dow Jones Newswires staff
Below are the most important global economic events likely to affect FX and bond markets in the week starting April 6.
Developments with the war in the Middle East will remain at the center of investors' minds as heightened uncertainties remain over when the war will end.
U.S. inflation data for March will be closely watched amid concerns about how high energy costs will lift prices more broadly and the potential for this to result in interest-rate rises, as will minutes of the most recent Federal Reserve meeting.
"The Iranian conflict continues to serve as the main driver of global financial markets, with sentiment yo-yoing as expectations swing between anticipating a relatively short end to the war and more intensive and prolonged attacks," Investec economist Philip Shaw said in a note.
European and U.K. economic data will be somewhat sparse as most markets are closed on Monday for the Easter holiday.
In Asia, a round of inflation data from China and economies in Southeast Asia will be scrutinized for signs of stress caused by the energy market turmoil. Central banks in India, South Korea and New Zealand will deliver decisions as policymakers seek to contain the economic fallout of the war.
U.S.
Investors will be watching U.S. inflation data for March on Friday closely as they try to glean some idea of how the spike in energy prices due to the Middle East war has fed through into broader inflation.
This could give clues as to whether or not the Federal Reserve is likely to raise interest rates to tackle rising inflation. Fed minutes, due on Wednesday, will also be closely watched for signals on the likelihood of rate hikes. U.S. money markets currently price in unchanged rates in the months ahead, with a 27% chance of a rate reduction by the end of 2026, LSEG data showed.
"The upcoming [U.S.] CPI reading for March will show the initial impact of soaring energy markets, even if the U.S. is somewhat insulated by being a net exporter of oil and gas," AJ Bell analysts said in a note. "Close attention is likely to be paid to the core number, which strips out volatile food and energy costs, to get an idea of whether the inflation bug is spreading more broadly across the economy."
The Fed kept interest rates unchanged at its last meeting, and the minutes will shed light on how the decision was made and what policymakers are thinking, they said.
Other data will be watched for signs of how the U.S. economy is performing during the Middle East war. The ISM survey on services for March is due Monday, weekly jobless claims Thursday, while the University of Michigan's preliminary consumer survey for April is released Friday.
Also due are durable goods figures for February on Tuesday, followed by the third estimate of fourth-quarter gross domestic product and PCE inflation data for February on Thursday.
The U.S. Treasury will auction three-year notes on Tuesday, 10-year notes on Wednesday and 30-year bonds on Thursday.
Canada
Canadian jobs data for March are released on Friday. Investors will be watching these figures to gauge how the economy has fared since the start of the war in the Middle East and the consequent spike in energy prices.
Eurozone
Final March services purchasing managers' data for Spain, Italy, France, Germany and the eurozone are scheduled for Tuesday. These will be the first releases in a short week after the Easter holidays. Germany will publish manufacturing orders data for February on Wednesday, followed by German and Spanish industrial production data for February on Thursday and Italian industrial production data on Friday.
Final German inflation data for March are due on Friday.
Germany will sell February 2035- and August 2050-dated green Bunds on Tuesday and February 2036-dated conventional Bunds on Wednesday. Austria will hold a bond auction on Tuesday, Portugal on Wednesday, Spain on Thursday and Italy on Friday.
U.K.
Economic data releases in the U.K. are relatively thin on the ground, with markets closed on Monday for Easter.
The final reading of the U.K. purchasing managers' survey on services activity for March is released on Tuesday.
The RICS U.K. house-price survey for March on Thursday will likely be of interest to investors given that investors have priced in a risk of interest-rate hikes in the coming months, having previously priced in rate cuts. With that, swap rates and mortgage rates have risen, "which might have put a dampener on buyer demand for house purchases," said Investec economist Sandra Horsfield in a note.
Scandinavia
Norwegian inflation data for March will be released on Friday. Denmark and Sweden will hold bond auctions on Wednesday.
Switzerland
Switzerland will hold a bond auction on Wednesday.
China
China's first full inflation print since the war began is in the spotlight on Friday as markets watch to gauge the impact of the surge in energy prices.
A WSJ poll projects that consumer price growth held at 1.3% on the year last month, while producer prices finally swung back into the green after more than three years in negative territory. Economists tip PPI at 0.5% in March versus -0.9% in February.
Markets will also monitor local gasoline price moves, ING economists said, as the biweekly adjustment is due April 7. "Prices have climbed since the outbreak of the war, but at a much slower pace than overall crude oil."
After a long period of deflationary pressure, a bump in price growth could seem welcome, but analysts note if demand remains weak, supply-side inflation will become a headwind.
For now, China looks better-placed than most of Asia as it can insulate from the price shock thanks to factors like sizable strategic reserves and the ability to fire up coal capacity if it needs.
Citi analysts still project that China's economy will grow 5% this year, expecting little disruption from the Iran war and resilient exports.
Japan
The Bank of Japan will release its quarterly regional economic report Monday, which investors will look to for hints on the timing of the next interest-rate increase. Signs that wage growth is becoming widespread, for example, could boost tightening expectations.
The government is slated to release February household spending data and current account balance figures on Tuesday and Wednesday, respectively.
On Wednesday, the BOJ will make outright purchases of three sectors of Japan's government bond market. These include sovereign securities with tenors of more than one year and up to three years and those with tenors of more than 10 years and up to 25.
The Ministry of Finance is scheduled to hold two auctions during the week, selling about 600 billion yen of 30-year JGBs on Tuesday and around 2.5 trillion yen of five-year sovereign notes on Thursday. The first could attract more bidding interest from investors due to higher yields which are likely to be offered by the longer-dated securities.
Australia/NZ
The Reserve Bank of New Zealand is widely expected to hold rates steady on Wednesday, against the backdrop of heightened uncertainty centered around the war in the Middle East.
Nomura economists are confident the RBNZ will keep the cash rate at 2.25% next week. "If it publishes a vote count, we think a unanimous decision is most likely," they said.
Guidance should be fairly balanced given the geopolitical tensions, though Nomura anticipates some saber rattling to help contain inflation expectations.
Strategists at TD Securities think the central bank will likely reaffirm its reluctance to respond impulsively to the supply shock, especially when the economy is operating below capacity, which should challenge market pricing of more than 75 basis points of hikes this year.
Economists at UOB point out that if anything, the RBNZ's previous statement carried a mildly dovish tone, with the projected cash rate ending the year slightly below earlier expectations and peaking at 3.00%. Policymakers will continue to balance inflation trends against the risk of tightening too early when the economic recovery is still fragile, UOB said.
Korea
On Friday, consensus looks for South Korea's central bank to stand pat as the economy grapples with the uncertainty from the Middle East conflict.
Most analysts expect the BOK to keep the policy rate at 2.50%, noting an impending leadership transition at the central bank and the economic risks posed by rising inflation and supply-chain disruptions.
Departing BOK Gov. Rhee Chang-yong is likely to maintain a cautious stance rather than offer clear guidance at his final rate-setting meeting on April 10, said Morgan Stanley economist Kathleen Oh.
Incoming Gov. Shin Hyun-song is unlikely to give many clues on future policy ahead of his confirmation hearing later this month, Oh said.
Higher oil prices pushed inflation above the central bank's 2.0% target in March, posing a headache for South Korea, a major energy importer that relies heavily on oil and gas from the Middle East.
ING economist Min Joo Kang expects inflation to accelerate in the coming months on higher energy costs, despite government measures to curb price growth.
Kang said the BOK is likely to adopt a wait-and-see stance in April as it assesses whether Middle East-driven energy shocks ease or intensify.
India
India's central bank rate meets Wednesday as policymakers look to balance growing downside risks to the economy from the Middle East conflict against the threat of an inflationary shock and weakness in the rupee.
While macroeconomic fundamentals remain strong, the Indian finance ministry's department of economic affairs has warned of "multi-layered" risks for India due to "its position as a major energy importer with strong trade, investment and remittance linkages" to the Middle East.
Tariff risks have eased but other external threats have grown, said DBS economists. Still, they expect the RBI to stand pat as monetary policy will likely be ineffective against the current mix of headwinds.
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04-05-26 1714ET
