Below are the most important global events likely to affect FX and bond markets in the coming week starting April 15.

Investors will continue to scrutinize U.S. data, including retail sales and industrial production, after recent higher-than-expected inflation figures suggested the Federal Reserve could be slower to cut interest rates than previously thought.

European indicators will also be watched closely as the European Central Bank is expected to cut interest rates in June but only if evidence of slowing inflation continues.

In Asia, focus centers on a raft of Chinese economic data which will be watched for signs of confirmation about the country's recovery, as well as a policy decision from the People's Bank of China.

Key releases in Australia and New Zealand, including jobs and economic growth numbers, could have big implications for central bank policy. Japan and India both release trade and inflation numbers, the latter as it gears up for parliamentary elections.

On Monday, the 2024 spring meetings of the World Bank Group and the International Monetary Fund will start in Washington, with ministerial-level meetings to take place later from Wednesday to Friday.


U.S.


Following recent strong U.S. inflation figures, any signs that the economy remains robust compared with other major economies would add to growing expectations that the Federal Reserve might not cut interest rates until September. Equally, weaker-than-expected economic data could bring back prospects of an early rate reduction.

In that light, U.S. retail sales for March on Monday and industrial production figures on Tuesday will be closely watched, alongside more forward-looking surveys including the April NY Empire State Manufacturing Index on Monday and the April Philadelphia Fed manufacturing index on Thursday.

Figures are also due on the state of the U.S. housing market, including housing starts on Tuesday and existing home sales on Thursday, both for March. Other data include U.S. business inventories for February and the NAHB housing market index on Monday, and weekly jobless claims on Thursday.

The U.S. will sell a 20-year Treasury bond on Wednesday and a 5-year inflation-linked bond, or TIPS, on Thursday.


CANADA


Canadian CPI inflation data are due on Tuesday, the same day as the government presents the budget for 2024.

BofA Securities said these two events could be key to determining whether the Bank of Canada opts to start cutting rates in June, as it expects. A re-acceleration in core inflation, which has slowed in recent months, and/or a large increase in government spending in the budget could delay a rate cut beyond June, BofA said.

Canada housing starts for March are due on Tuesday. A recent report from the country's Parliamentary Budget Officer showed that Canada needs a massive surge in supply to close its housing shortfall.


EUROZONE


The European Central Bank left interest rates on hold at its April meeting but gave strong hints that an interest-rate cut was possible in June, dependent on inflation continuing to slow.

This could put unusually high attention on Wednesday's release of final eurozone inflation data for March to see whether there are any revisions to the provisional figures. These showed annual CPI inflation fell more than expected to 2.4%, contrasting with higher-than-expected figures from the U.S.

The outlook for the economy, which has shown signs of recovery from quite weak levels, will also be crucial for the ECB. Eurozone industrial production for February on Monday will be watched for any signs of improvement in the troubled manufacturing sector. Forward-looking surveys will also be important, including April ZEW sentiment surveys for Germany and the eurozone on Tuesday and French business confidence for April on Friday.

"If incoming data, notably in relation to wages and corporate profits, broadly confirm the scenario foreseen in its March projections, we believe the ECB will start dialing back its restrictive monetary policy stance," said Konstantin Veit, Portfolio Manager at Pimco in a note, adding that a June rate cut seems increasingly likely.

Eurozone government-bond supply in the coming week will be heavy and features supply of ultra-long bonds from core issuers. On Tuesday, the Netherlands will tap 2054-dated bonds and Finland will offer 2029- and 2055-dated bonds. On Wednesday, Germany will reopen 2050- and 2054-dated Bunds. Other issuers include Slovakia on Monday, Greece on Wednesday, and Spain and France on Thursday.

In Scandinavia, Denmark and Norway are due to hold auctions on Wednesday, while Sweden is scheduled to sell inflation-linked bonds on Thursday.


U.K.


U.K. inflation data for March on Wednesday will be a key indicator of whether or not prices are slowing sufficiently for the Bank of England to opt for an early interest-rate cut, or whether they remain too elevated. Annual CPI inflation fell more than expected in February to 3.4%.

Bank of England Governor Andrew Bailey said last month that rate cuts were "in play" at future meetings. More recently, however, external policymaker Megan Greene said rate cuts could still be a way off and that there is a greater risk of inflation persisting in the U.K. than in the U.S.

Ahead of the inflation numbers, U.K. jobs data are due on Tuesday, where there will be particular focus on whether wage growth is edging lower. Retail sales for March on Friday will give an indication of how well the economy is holding up.

The U.K. will sell index-linked government bonds, or gilts, maturing in 2033 on Tuesday and conventional gilts maturing in 2031 on Wednesday.


SWITZERLAND


Swiss producer and import price data for March are due on Monday. These will be watched for any signs of further weakness in inflationary pressures which could lead the Swiss National Bank to cut interest rates again.


CHINA


Investors are bracing for a flood of China data on Tuesday: house prices, retail sales, fixed assets investment, industrial output for March, plus first-quarter GDP numbers. These will be preceded by a rate decision by the country's central bank that could shift expectations about further stimulus and the outlook for the yuan.

A recent bundle of positive data has spurred tentative hopes that China may have started off the year on more solid footing, with some economists upgrading forecasts for economic growth this year. But a slump in exports and renewed deflation worries have traders wondering if the green shoots are really taking root.

Barclays economists including Jian Chang and Brian Tan see some scope for better-than-expected first-quarter China GDP-which is production-based-thanks to a faster recovery in March PMIs and strong January-February industrial production and export data. However, they expect to see a moderation in retail sales growth and industrial production for March.

China's low inflation gives the central bank space for policy easing, but its priority on keeping the yuan stable may limit room for rate cuts near term, ING economists said. The central bank has already had to push back against yuan depreciation as markets have scaled back expectations for rate cuts in the U.S., said Lynn Song, chief Greater China economist at ING. ING said the PBOC could opt to lower banks' reserve requirement ratios instead of cutting interest rates to support the economy, as the former won't add pressure on the yuan while the latter could worsen already unfavorable yield spreads.

ING expects the central bank to keep the interest rate on one-year medium-term lending facility at 2.5%. The MLF is used to manage banking sector liquidity by funneling loans to lenders.


JAPAN


Japan machinery orders figures are due on Monday*, followed by provisional trade statistics for March on Wednesday*, though the main focus will be on the latest CPI inflation figures on Friday*. A speech by BOJ board member Asahi Noguchi on Thursday* will also be watched.

Market participants will be on alert for potential intervention by Japanese authorities in the foreign-exchange market to curb a significant weakening of the yen, which has fallen to its weakest in 34 years against the U.S. dollar. Japan's Finance Minister Shunichi Suzuki has said that excessive moves in the Japanese currency aren't desirable and that the ministry isn't ruling out any options to respond to excessive currency movements. A sharply weaker yen would increase Japan's import costs, potentially causing much higher inflation than the government likely wants.


AUSTRALIA & NEW ZEALAND


The data flow in Australia and New Zealand next week could radically reshape the central bank policy outlook in both countries.

Australia's March employment data on Thursday is eagerly awaited after February data showed a significant drop in unemployment on the back of an employment gain of over 100,000 for the month.

If the March jobs data show another strong month of employment gains, forecasts that the Reserve Bank of Australia will be cutting interest rates in the second half of this year will be unwound quickly.

The RBA expects the unemployment rate to be closer to 4.5% by the end of the year, from the current 3.7%.

In New Zealand, first-quarter inflation data on Wednesday* will need to show some moderation to support market bets that interest rates will be lowered by around August.

The RBNZ continues to warn that, despite a lengthening recession, sticky inflation will keep interest rates higher for some time yet.

"We continue to expect that the RBNZ will require considerably more certainty before contemplating cuts," said Sharon Zollner, chief economist at ANZ. "Headline CPI inflation is still a long way from where it needs to be. We continue to expect cuts won't be on the table until 2025."


SINGAPORE


On Wednesday, Singapore's non-oil domestic exports for March will be released. Market participants will closely watch the data after non-oil domestic exports unexpectedly fell in February, mainly due to a decline in non-electronics shipments.

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04-14-24 1814ET