UPCOMING EVENTS:
- Monday: China Caixin Services PMI, Eurozone PPI, Canada Services PMI, US ISM Services PMI.
- Tuesday: Japan Wage data, RBA Policy Decision, Eurozone Retail Sales, New Zealand Jobs data.
- Wednesday: Switzerland Unemployment Rate.
- Thursday: China Inflation data, US Jobless Claims.
- Friday: US Annual CPI revision, Canada Jobs data.
Monday
The US ISM Services PMI is expected at 52.0 vs. 50.6 prior. The latest S&P Global Services PMI improved notably with generally positive comments especially on the inflation part. The last ISM report missed expectations across the board and the employment component plunged to levels last seen only in the last three recessions. It will be interesting to see if the last dip was just a blip or something is brewing under the hood.
Tuesday
The Japanese Average Cash Earnings Y/Y will be a data point to watch given the BoJ’s sole focus on wage growth. The last month the data disappointed meaningfully showing a drop to 0.2% vs. 1.5% prior. The attention remains on the spring wage negotiations and the easing in inflation might help to bring real wages into positive territory.
The RBA is expected to keep the Cash Rate unchanged at 4.35% with possibly some changes to the statement where they could drop the tightening bias following an ugly labour market report and a broad fall in inflation rates across all measures. The market was expecting the first rate cut in August, but that was brought forward to June after the recent data releases.
The New Zealand Employment is expected to show a 0.3% rise in Q4 vs. a drop of -0.2% in Q3 and the unemployment rate to increase to 4.3% vs. 3.9% prior. The labour costs are seen lower with the Q/Q measure expected at 0.8% vs. 0.9% prior and the Y/Y one at 3.7% vs. 4.1% prior. The market expects the RBNZ to cut rates in May and if the data comes out as expected or even worse, then that would become a real possibility.
Thursday
The Chinese CPI Y/Y is expected at -0.5% vs. -0.3% prior, while the M/M measure is seen at 0.4% vs. 0.1% prior. There is no consensus for the Core CPI Y/Y although the prior figure showed a 0.6% rise, which was the same as for the previous two months. There are still deflationary forces in China and the falling stock market doesn’t help either. The PBoC recently cut the RRR by 50 bps, which was more than expected, but it looks like the market wants to see more.
The US Jobless Claims continue to be one of the most important releases every week as it’s a timelier indicator on the state of the labour market. Initial Claims keep on hovering around cycle lows although they’ve been rising in the last two weeks, while Continuing Claims started to trend higher again, and they are now close to the cycle high. This week the consensus sees Initial Claims at 220K vs. 224K prior, while there’s no consensus for Continuing Claims although the prior release saw an increase to 1898K vs. 1828K prior.
Friday
The Canadian labour market report is expected to show 15K jobs added in January vs. 0.1K in December and the Unemployment Rate to tick higher to 5.9% vs. 5.8% prior. The BoC places a lot of focus on underlying inflation measures and wage growth, so the Average Hourly Wages Y/Y will be a key indicator to watch as the prior release saw a spike to 5.7%, which was the highest since January 2021.
