The week will start slow with a holiday in Europe to observe Labor Day on Monday, but we'll get some data from the U.S., like the ISM Manufacturing PMI. On Tuesday, all eyes will be on the RBA meeting and cash rate in Australia. Additionally, the U.S. JOLTS Job Openings data will be released.

Moving to Wednesday, New Zealand will release their employment change q/q and unemployment rate. The U.S. will release the ADP Non-Farm Employment change and ISM Services PMI, followed by the FOMC statement, Federal Funds Rate and FOMC press conference.

Thursday will bring the eurozone main refinancing rate, monetary policy statement and the ECB press conference. Finally, on Friday, Switzerland will release their CPI m/m data, while the U.S. will release the average hourly earnings m/m, non-farm employment change and the unemployment rate. Canada will also release their employment change and unemployment rate data on Friday.

The U.S. ISM manufacturing PMI and Services PMI will provide some clues about the business sector's performance in Q2 after a disappointing Q1 impacted by lower demand and high interest rates. Market analysts expect a slight increase in the U.S. PMI from 46.3 to 46.6, and a rise in the Services PMI to 51.6 from 51.2.

The market anticipates that the RBA will maintain the current interest rates at this week's meeting, similar to their decision at the last meeting. Despite the persistent high inflation in Australia, there are indications that it may have reached its peak, prompting the Bank to adopt a wait-and-see approach to assess the effects of monetary policy decisions. According to Governor Lowe's remarks after the RBA's last meeting, holding the rates unchanged did not necessarily mean that hikes had come to an end.

For the March JOLTS Job openings data the consensus is for a drop to 9.74M from 9.93M, but Citi analysts actually expect a slight rise to 10.1M following an unexpected drop in February. Even with that drop, job openings are currently at a higher number than pre-pandemic levels.

The upcoming data for New Zealand includes the Q1 Employment Change, with a consensus for it to remain unchanged at 0.2%, as well as the unemployment rate, which is expected to rise slightly from 3.4% to 3.5%. The participation rate is likely to remain at 71.7%. These data are crucial for the RBNZ, which needs to see evidence of a labor market easing and a cooling down of inflation before pausing the rate hiking cycle.

The market expects a 25bps rate hike at the upcoming FOMC meeting, followed by a pause to assess the effectiveness of the current monetary policy. Chair Powell will probably be questioned about the possible end of the hiking cycle, but he's likely to reiterate the Fed's data-dependency approach and avoid a straight answer. Questions about the ongoing stress in the financial sector may also be raised during the meeting.

This week, the focus will be on the inflation data for the eurozone, as it could provide insight into the ECB's upcoming meeting on Thursday. Following a rise in core inflation in March, ECB Chief Economist Philip Lane emphasized that more tightening is likely, stating that "the current data are indicating that we should raise rates again." The market consensus is for a 25bps rate hike at the May meeting, followed by another 25bps hike in June. It is anticipated that y/y headline inflation data for April will run hot.

Despite mixed recent data, the job market remains tight in the United States. Analysts predict that payroll growth will slow from 236K to 180K, while average hourly earnings m/m are expected to remain stable at 0.3%, and the unemployment rate is anticipated to rise from 3.5% to 3.6%.

"The labor force participation rate also rose for a fourth straight month," Wells Fargo analysts said. "But falling hiring plans and job openings point to demand for workers continuing to trend lower."

For the Canadian economy the employment change is expected to drop from 34.7K to 22.6K and the unemployment rate to rise from 5% to 5.1%.

This article was written by Gina Constantin.