Below are the most important global events likely to affect FX and bond markets in the week starting Monday April 8.

Wednesday's U.S. inflation data for March and Thursday's interest-rate decision by the European Central Bank are likely to take center stage as investors remain uncertain about when the ECB and the U.S. Federal Reserve will start cutting interest rates.

A rate decision is also due in Canada. In Asia, central-bank decisions in New Zealand, South Korea, Singapore, Thailand and the Philippines will be watched amid broad pressure on Asian currencies. A smattering of data from China will be studied for more signs that an economic recovery is gathering steam.


U.S.


U.S. inflation data for March due on Wednesday are likely to attract particular attention given their importance for determining when the U.S. Federal Reserve could start cutting interest rates and following recent mixed comments from policymakers.

Fed Chair Jerome Powell said recently that interest-rate cuts are still likely this year despite a strong economy. In particular, he said stronger-than-expected inflation data for January and February hadn't shaken the Fed's policy outlook. However, President of the Federal Reserve Bank of Minneapolis Neel Kashkari said if inflation continued to move sideways, "that would make me question whether we needed to do those rate cuts at all." This suggests inflation data will be scrutinized intensely, particularly given a recent rise in crude oil prices.

Other U.S. economic data to watch out for will be producer price data and weekly jobless claims on Thursday, followed by the University of Michigan preliminary consumer survey for April on Friday, which should give a more up-to-date picture of the health of the U.S. economy.


CANADA


The Bank of Canada is expected to leave its policy rate unchanged at 5.0% on Wednesday as it presents its latest decision and monetary policy report. Focus will be on any hints regarding the timing of a likely interest-rate cut, but analysts say the bank could be cautious following recent data showing Canada's industry-level GDP rose by 0.6% on month in January, well above forecasts.

The GDP data "should raise the bar for any dovish pivot at the April BOC meeting, as the Bank will want to see more data for February/March before it is ready to shift its stance," analysts at TD Securities said in a note.


EUROZONE


The European Central Bank is expected to leave interest rates on hold when it announces a decision on Thursday, but falling levels of inflation mean it could discuss interest-rate cuts actively for the first time and set the stage for a possible rate cut in June.

An early interest-rate cut this month looks "highly unlikely" given that inflation remains above target and services inflation is too high, said ING economist Carsten Brzeski in a note.

The minutes to the latest ECB meeting said the Governing Council would have "significantly more data and information" by the June meeting, especially on wage dynamics, while the new information available in time for the April meeting would be "much more limited, making it harder to be sufficiently confident about the sustainability of the disinflation process by then."

German industrial production and trade data for February on Monday could give clues on how well the eurozone's largest economy is recovering. Final German inflation data for March are due on Friday.

Bond issuance will include Germany reopening April 2029-dated federal notes, or Bobl, on Tuesday and launching new May 2041-dated Bunds on Wednesday. On Tuesday, Austria will sell 2029- and 2034-dated bonds. Portugal is due to hold an auction on Wednesday, while Italy's mid-month bond auction is due on Thursday.


U.K.


U.K. monthly GDP, trade and industrial production data for February are due on Friday and will be watched closely for signs of whether the economy is wobbling or whether it continues to look robust. Investors continue to speculate about prospects of a summer interest-rate cut, perhaps even as early as May, after Bank of England Governor Andrew Bailey said recently that rate cuts were "in play" at future meetings.

The U.K.'s Debt Management Office will auction gilts maturing in 2027 on Wednesday.


SWEDEN


Swedish inflation data for March are due on Friday and will be closely watched in light of the Riksbank's recent comment at its last policy announcement that interest rates could be cut in May or June. This data could be a key indicator of whether rates could be cut as soon as May.

Handelsbanken expects Swedish headline CPIF inflation to increase to 2.6% on year in March from 2.5% in February, with CPIF excluding energy dropping to 3.3%. The bank's head of forecasting, Johan Lof, said the Riksbank's inflation forecasts could be too optimistic in terms of anticipating progress in bringing inflation down towards the 2% target, adding that recent krona weakness could cause inflation to rise.


NORWAY


Norwegian inflation data for March are due on Wednesday, which could be a key indicator of whether Norges Bank is correct in its latest forecast that interest rates won't be cut until the fourth quarter or whether a cut could come sooner.

Capital Economics expects falling inflation could mean the central bank will start loosening policy earlier, most likely in June. "We expect inflation to continue to fall faster than Norges Bank forecasts as the previous appreciation of the krone continues to push down goods inflation and rent inflation drops sharply," economists Adrian Prettejohn and Franziska Palmas write.

Norway monthly GDP data for February are also due on Thursday.


CHINA


A recent run of upbeat data is sparking some hope that China's economy is finally turning a corner. That puts an even sharper spotlight on the coming releases: a CPI and PPI double bill on Thursday, followed by trade data on Friday.

The prints, all for March, could either buoy or deflate expectations about the health of the economy.

A WSJ poll shows China's consumer prices likely rose for the second straight month in March but at a slower pace than February, as a temporary Lunar New Year holiday spending boost faded. China's consumer prices likely rose 0.4% on year in March, down from February's 0.7% growth, which ended four months of price decline. Producer prices likely fell 2.8% on year in March, widening from February's 2.7% fall, pointing to persisting deflationary pressures.

Surveyed economists expect China's exports to fall 3.4% in March from a year earlier, down from the 7.1% growth in the January-February period. Imports likely rose 1.4% on year, down from the 3.5% expansion in the first two months, the WSJ poll shows. Data for both exports and imports in March might have been dwarfed by a high base from a year earlier, economists say.

More signs of a stabilizing economy should further limit falls for onshore yuan rates, DBS forex strategist Samuel Tse said.

"Authorities may ease the liquidity tightening if CNH exchange rates stabilize on favorable data prints," he wrote in a note, adding that indicators such as manufacturing PMIs hint at a potential upside surprise in the upcoming March data.

Traders will also watch out for more policy announcements after China's central bank pledged more policy support, saying it will double down on efforts to address short-term economic volatility.

More stimulus would go a long way to restoring confidence in the economy, with many economists saying more is needed to firm up the recovery, and warning of a reversal if the policy momentum is reduced.


JAPAN


Japan publishes balance of payments data on Monday* in an otherwise light week of releases. The Economy Watchers Survey, which gauges the mood toward current and future economic conditions, is also due.

Any comments on the yen will be closely watched.

Market participants are likely to keep monitoring ongoing risks of potential foreign-exchange intervention by Japanese authorities as a weak yen continues to hover near the psychologically important 152.00 level per dollar. Warnings from Japanese government officials have recently ramped up as Japan's currency weakened to 34-year lows against the U.S. currency.


NEW ZEALAND


New Zealand's next central bank policy meeting is set for Wednesday.

With the farm-rich economy languishing in an extended recession, the Reserve Bank of New Zealand is unlikely to announce a further rise in the official cash rate from the current 5.5%.

With inflation pressures still a challenge, it seems unlikely that the RBNZ will back away from the idea that interest rates will need to remain higher for longer.

"There has been nothing to move the dial on the data front in recent weeks, so we are expecting a reiteration of the key messages from the February monetary policy statement," said Sharon Zollner, chief economist for New Zealand at ANZ.

Money markets are betting that interest-rate cuts might come on to the radar by August, but a hawkish message from the RBNZ could see those bets pushed back to later in the year.


SOUTH KOREA


Bank of Korea gears up for its policy decision on Friday, with a secondary focus on upcoming elections.

The inflationary backdrop suggests that the bank is in no rush to start easing, with March figures showing that inflation topped 3% for a second consecutive month--well above the central bank's 2% target.

All 24 economists surveyed by The Wall Street Journal expect the central bank to keep its base rate unchanged at a 15-year high of 3.50%, extending its pause for a 10th straight meeting. Most economists pencil in a possible rate cut in the second half of the year as the bank keeps delaying its anticipated policy pivot toward easing because of sticky inflation.

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04-05-24 0857ET