We don’t have a central bank meeting scheduled for this week, but we have important economic releases that could well affect monetary policy plans. In the UK, the spotlight will fall on jobs data as investors try to figure out whether and when the BoE will raise interest rates this year. In Canada, April CPIs have the potential to impact market expectations with regards to the next BoC rate hike. The RBA minutes, US retail sales, as well as Japan’s GDP and CPI data could also attract attention.
On Monday, the only noteworthy release we have is the OPEC monthly report, which includes a detailed analysis of supply and demand in the oil market.
On Tuesday, during the Asian morning, we get the minutes from the latest RBA meeting. At that meeting, the Bank kept interest rates unchanged at +1.50% and made little changes to the statement accompanying the decision. That said, in the quarterly Statement on Monetary Policy, released a few days after the meeting, the Bank upgraded its forecasts for underlying inflation and now expects it to hit 2%, the lower end of its 2-3% target range, in June 2018 instead of June 2019. Therefore, we will scan the minutes for the policymakers’ view on inflation and interest rates. According to the aforementioned quarterly Statement, financial market prices imply that interest rates are expected to remain unchanged this year and rise around the middle of 2019.
From China, we get industrial production, retail sales and fixed asset investment, all for April. Following the Q1 GDP data, which showed that the Chinese economy grew 6.8% yoy, the same pace as in Q4 2017, it would be interesting to see how the economy entered the second quarter of 2018. Industrial production is forecast to have accelerated to 6.4% yoy from 6.0%, while retail sales are expected to have slowed somewhat, to +10.0% yoy from +10.1%. The fixed asset investment rate is anticipated to have ticked down as well, to +7.4% yoy from 7.5%.
Read the full financial markets weekly outlook on JFD Research.