UPCOMING EVENTS:
- Monday: US ISM Services PMI.
- Tuesday: RBA Policy Announcement.
- Wednesday: BoC Policy Announcement.
- Thursday: US Jobless Claims .
Monday: The ISM Services PMI is expected to come a tick lower at 51.8 vs. 51.9 prior. The market will focus particularly on the prices paid side as core inflation remains stickier much above the Fed’s 2% target with the manufacturing sector contracting and the services one expanding. The S&P Global PMIs have been leading the ISM reports lately and last month the Services PMI surprised with a big beat, so the expectations for the ISM report should be skewed to the upside.
Tuesday: The RBA is expected to keep rates unchanged after it surprised with a rate hike the last meeting. The Australian CPI recently beat expectations, so the RBA may have not liked that. Another surprising rate hike cannot be ruled out, especially given that the RBA has recently signalled that it’s “important to return inflation back to target within a reasonable timeframe”. This is because high inflation for a long time increases the risk of expectations getting de-anchored.
Wednesday: The BoC is expected to keep rates unchanged. The BoC was the first central bank among the majors to pause, but the recent economic data and inflation trends may start to make them feel uneasy.
Thursday: The US Jobless Claims, as expected, have lost their market moving potential as the brief uptrend in claims after the mid-March banking woes has reversed. The market may move on this report only if we get a big miss since beats have become the norm. Initial Claims are expected at 239K vs. 232K prior.
This article was written by Giuseppe Dellamotta.