Following last week’s BoC policy decision, this week the central bank torch is passed to the ECB and the BoJ. We don’t expect any changes in language around policy from either Bank, so all the attention is likely to fall at the press conferences following the decisions. The UK and US preliminary GDP data for Q1 are likely to be in focus as well.
Monday is a PMI day. During the European morning, we get the preliminary manufacturing and services PMIs from several European nations and the Eurozone as a whole. Both the euro area manufacturing and services indices are anticipated to have declined, something that could drive the composite PMI down for the third consecutive month.
We get preliminary Markit manufacturing and services PMIs for April from the US as well. The manufacturing index is expected to have slid somewhat, while the services one is forecast to have slightly risen. The composite is expected to have increased to 55.3 from 54.2. That said, the market tends to pay more attention to the ISM indices that are due to be released next week. Existing home sales for March are also coming out.
On Tuesday, during the Asian morning, we get Australia’s CPI data for Q1. Expectations are for the headline CPI rate to have ticked up to +2.0% yoy from +1.9% in Q4, while the trimmed mean rate is forecast to have remained unchanged at +1.8% yoy. Such prints would be more or less in line with the Bank’s projection for the first half of the year, and thus they are unlikely to alter much expectations with regards to when the Bank may start to raise interest rates. According to its February Statement on Monetary policy, the Bank is expected to increase interest rates by early next year. That said though, we need to see Q2 CPI data before we arrive to safe conclusions on whether inflation is inline, above, or below the Bank’s estimates for the first half of the year.
Read the full financial markets weekly outlook on JFD Research.