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Market players are impatient to assess how concerned Fed is about surging bond yields

USD

U.S. dollar ended last week on a neutral tone, with the Dollar Index retracting after disappointing numbers from the labor market. However, this week is set to bring optimistic economic data, with Services PMI and Factory Orders for March on Monday, reflecting better weather, positive vaccine progress, and the ongoing reopening of the U.S. economy. On Wednesday the FOMC/Fed March meeting minutes will be published and garner particular attention. Market players are impatient to assess how concerned the Fed is about surging bond yields and when monetary policy may start being tapered. Other key U.S. data releases include February’s JOLTs Job Openings, Jobless Claims, and Producer Price Index. Key figures coming up:

  • On Monday (04/05): Services PMI (Mar) | Factory Orders (Feb)
  • On Tuesday (04/06): JOLTs Job Openings (Feb) | API Weekly Crude Oil Stock
  • On Wednesday (04/07): Trade Balance (Feb) | FOMC Meeting Minutes 
  • On Thursday (04/08): Initial Jobless Claims (Weekly) | Fed Chair Powell Speaks 
  • On Friday (04/09): Producer Price Index (Mar)

EUR

The unexpected Manufacturing PMI figures, showing that Eurozone factories were seeing their fastest pace in growth in a near 24-year history in March, was the highlight of the last week. The data showed that albeit the pandemic situation is a tough hurdle across the bloc, there is growing domestic demand and resurgent export growth. The upcoming week sees the unemployment rate on Monday, which will be under scrutiny after the positive PMI data. On Wednesday, the Services PMI survey will also be eyed for signs of resilience amid further waves of infections.  German factory orders and industrial production will also be out on Thursday and Friday, respectively. Meanwhile, the ECB Monetary Policy Statement will provide further clues on its recent decision to step up asset purchases amid concerns over rising bond yields. Key figures coming up:

  • On Tuesday (04/06): Unemployment Rate (Feb) | Consumer Inflation Expectation
  • On Wednesday (04/07): Eurozone Services and Composite PMI (Mar)
  • On Thursday (04/08): German Factory Orders (Feb) | Producer Price Index (Feb) | ECB Monetary Policy Statement 
  • On Friday (04/09): German Trade Balance (Feb) | German Industrial Production (Feb)      

GBP

The vaccine rollout and the loosening of lockdown restrictions will continue to underpin the U.K. economic recovery, as well as provide important support to the Pound over the week. The release of Services, Composite, and Construction PMI data during the week will give an updated view on the U.K economic trends. In general, it is a relatively quiet week ahead, with traders paying attention to the EUR/USD movements as the GBP/USD direction will be largely about EUR/USD. Key figures coming up:

  • On Wednesday (04/07): Services and Composite PMI (Mar) | RICS House Price Balance (Mar)
  • On Thursday (04/08): Construction PMI (Mar)
  • On Friday (04/09): Halifax House Price Index (Mar) | BoE Quarterly Bulletin   

JPY

Over the last week, market participants received positive Manufacturing PMI data, which showed a surge of strong factory activity through March. This rebound was thanks to a broad-based recovery in demand, along with a weaker JPY which may have delivered some windfall gains to Japanese exporters. The upcoming week kicks off with March Services and Composite PMI data and Household spending on Monday. The latter will draw interest as another slide in spending will raise more concern over the economic outlook. On Thursday, exports and imports data will provide some color for the trade balance and the international demand recovery. Elsewhere, it is expected that the Japanese Yen continues to see a greater influence of higher U.S. bond yields. Key figures coming up:

  • On Monday (04/05): Household Spending (Feb) | Overall wage income of employees (Feb) | au Jibun Bank Services and Composite PMI (Mar)
  • On Wednesday (04/07): Coincident Indicator (Feb) | Leading Index (Feb) |     
  • On Thursday (04/08): Household Confidence (Mar) | Economy Watchers Current Index (Mar) | Trade Balance (Feb) | Current Account (Feb)

CAD

In Canada, February’s trade balance which will be reported on Wednesday might show another surplus, helped by higher oil prices. March Ivey PMI numbers are also due out mid-week and it is expected to influence the Loonie. Ending the week, other strong jobs report due to economic reopening is suggesting that the Bank of Canada will announce another quantitative easing tapering in the next meeting (expected for 21st April). Any upbeat economic data is contributing to hawkish expectations. Elsewhere, crude oil inventories will also remain a key driver, however. Key figures coming up:

  • On Wednesday (04/07): Trade Balance (Feb) | Ivey PMI (Mar)
  • On Friday (04/09): Unemployment Rate (Mar) | Employment Change (Mar)

MXN

Last week, upbeat headlines from the latest OPEC+ meeting were the major driver. The Mexican peso gained after the alliance decided to gradually curb oil production cuts beginning in May as the ongoing Covid-19 crisis continues to cloud the outlook for the remainder of the year. The upcoming week kicks off with Manufacturing PMI data on Monday, followed by a Consumer Confidence Survey on Tuesday. March’s Consumer Price Index will drive the market’s attention and provide Mexico’s Central Bank with a fresh inflation reading. However, the door to further easing is closed, given the unanimity of the decision and the cautious tone in the last meeting. Ending the week, industrial production on Friday may suggest that a full recovery to pre-pandemic levels will be slow and painful. Key figures coming up:

  • On Monday (04/05): Manufacturing PMI (Mar)
  • On Tuesday (04/06): Consumer Confidence
  • On Thursday (04/08): Consumer Price Index (Mar)
  • On Friday (04/09): Industrial Production (Feb) 

CNY

In China, the recent Manufacturing PMI data showed that not only production increased in March again amid a further uptick in sales, but also inflationary pressures picked up. For the coming week, Caixin service sector PMI figures will be in focus on Monday. More strong data is expected as Chinese consumers have started to perk up recently after months of hesitation. At the end of the week, inflation figures for March are due out and should come in line with the last March PMI data. In general, it is a light week on the economic front, which will allow FX markets to be influenced by geopolitics and Covid-19. Key figures coming up:

  • On Monday (04/05): Caixin Services and Composite PMI (Mar)
  • On Wednesday (04/07): FX Reserves (USD) (Mar)
  • On Thursday (04/08): Consumer Price Index (Mar) | Producer Price Index (Mar)

BRL

Last week was marked by a major ministerial reshuffle and the resignation of the heads of all three branches of the armed forces. Although some politicians and authorities raised fears that it could represent a risk to the democratic regime in Brazil, Bolsonaro’s move illustrates the external and internal pressure which his government is under due to the pandemic situation and the vaccine rollout. The emergency aid will begin to be paid this week and it will have a positive economic impact. On the economic data front, this week will bring a raft of inflation figures, which will provide further evidence of the price situation for Brazil’s Central Bank. Key figures coming up:

  • On Monday (04/05): IPC-Fipe Inflation Index (Mar)
  • On Tuesday (04/06): Services and Composite PMI (Mar)
  • On Wednesday (04/07): IGP-DI Inflation Index (Mar)
  • On Friday (04/09): Consumer Price Index (Mar) | Brazilian IPCA Inflation Index (Mar)     

Quick Insights

USD: Better weather, positive vaccine progress, and the ongoing reopening of the U.S. economy

USD: Better weather, positive vaccine progress, and the ongoing reopening of the U.S. economy

EUR: The Services PMI survey will also be eyed for signs of resilience amid further waves of infection

EUR: The Services PMI survey will also be eyed for signs of resilience amid further waves of infection

GBP: The release of PMI surveys during the week will give an updated view on the U.K economic trends

GBP: The release of PMI surveys during the week will give an updated view on the U.K economic trends

JPY: Exports and imports data will provide some color for the trade balance and the international demand recovery

JPY: Exports and imports data will provide some color for the trade balance and the international demand recovery

CAD: Jobs reports might suggest that the Bank of Canada will announce another quantitative easing tapering in the next meeting

CAD: Jobs reports might suggest that the Bank of Canada will announce another quantitative easing tapering in the next meeting

MXN: March’s Consumer Price Index will drive the market’s attention and provide Mexico’s Central Bank with fresh inflation reading

MXN: March’s Consumer Price Index will drive the market’s attention and provide Mexico’s Central Bank with fresh inflation reading

CNY: It is a light week on the economic front, which will allow the influence of geopolitics and Covid-19 on the FX markets

CNY: It is a light week on the economic front, which will allow the influence of geopolitics and Covid-19 on the FX markets

BRL: The emergency aid will begin to be paid this week and it will have a positive economic impactn puts additional pressure on the currency

BRL: The emergency aid will begin to be paid this week and it will have a positive economic impact

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