April week 3, Looking Back and Looking Forward

Final Week of April Brings Inflation Data for US and Australia

As the final week of April approaches, traders are preparing for a flurry of economic data releases that could impact forex markets. Inflation data for the US and Australia will be the focus of attention, along with Japan's new Governor Ueda's first meeting with the BOJ. Traders should remain cautious and alert as central banks are known for surprising the market. Additionally, there will be an advance read for Q1 GDP and a plethora of business sentiment reports to analyze.

A Recap of the Previous Week's Forex Market Highlights

Looking back at the previous week's forex market, the RBA minutes suggested that the case for a pause in their tightening cycle was balanced. China's data exceeded expectations with strong YTD growth, retail sales, and lower unemployment. Despite this, traders were cautious due to concerns of slower growth in the future. GBP rose due to a strong inflation rate, rising wages, and a tight labor market. Canada's inflation figures were below expectations, keeping the BOC on track for another pause. Additionally, comments from Fed members were predictably hawkish ahead of the blackout period.

Looking Forward to Forex Market Calendar for the Week Ahead

Monday 24th April:

• US: Chicago Fed National Activity Index, Dallas Fed Manufacturing Survey, Fed blackout period (began Saturday 22nd)
• Canada: New Housing Price Index,
• EU: German IFO business climate,
• Australia: New insights into the rental market (new release),

Tuesday 25th April:

• US: Building permits (revised), Philadelphia Fed Non-Manufacturing Survey, Conference Board Consumer confidence, New Residential Sales, Richmond Fed Survey of Manufacturing Activity, Dallas Fed Texas Retail Outlook Survey, API's Weekly Statistical Bulletin (WSB)
• UK: Public sector finances
• Switzerland: Trade balance
• Japan: Services PPI, China store sales y/y
• Australia: Public holiday – Anzac Day

Wednesday 26th April:

• US:, Advance International Trade In Goods, mortgage applications/market index, Advance Durable Goods, wholesale inventories, EIA weekly report, Corporate Bond Market Distress Index (CMDI)
• Canada: Monthly Survey of Manufacturing (Flash), BOC minutes of the meeting
• EU: France consumer confidence, Q1 France GDP advanced
• Switzerland: Wage Index
• Australia: Consumer Price Index (March Quarter)

Thursday 27th April:

• US: Gross Domestic Product 1st Release, Initial Claims, Pending Home Sales Index, Weekly Economic Index
• Canada: Payroll employment, earnings and hours, and job vacancies
• EU: Economic Sentiment Indicator and Business Climate
• UK: UK trade Q4 for goods and services
• China: Industrial profits
• Japan: Indexes of Business Conditions (revised)
• Australia: Import/Export prices index

Friday 28th April:

• US: Personal consumption expenditure inflation, Employment Cost Index q/q, University of Michigan consumer survey (final), Dallas Fed PCE
• Canada: Gross domestic product by industry m/m
• EU: Q1 GDP advanced (eurozone, Germany, France), Germany state inflation, France CPI
• UK: UK government debt and deficit (December 2022)
• Switzerland: Retail trade turnover, ZEW investor sentiment
• Japan: Bank of Japan meeting, Tokyo consumer prices, Employment report, construction orders, industrial output (preliminary), retail sales, Foreign investment, Leading indicator (revised)
• Australia: Producer Price Indexes (March quarter)

 Key Events for the Week Ahead in Forex Markets

One of the key events for the week ahead is Australia's quarterly CPI report on Wednesday. Traders will be closely monitoring this data as it could prompt bets for an RBA hike in May. The RBA's latest MPS forecast a fall in annual inflation to 6.75% y/y in Q2 and trimmed mean down to 6.25%. If inflation does not soften that much, AUD pairs could be vulnerable to upside risks. Another key event is the US personal consumption expenditure (PCE) data release. Despite the rate of inflation in the US slowing, it remains elevated. Therefore, traders will be focused on the monthly PCE and core PCE figures next week.

BOJ Meeting Could Bring Surprises for Forex Markets

The BOJ meeting on Friday APAC / late Thursday US will be the first monetary policy meeting for the new BOJ Governor Ueda. While it is likely that they will keep policy unchanged with their ultra-dovish stance, there is always the possibility of a surprise announcement. An ex-BOJ member has reportedly said that the central bank should surprise markets with a change to their yield curve control policy. This could lead to serious volatility in their bond and currency markets, and the yen could strengthen as it did in January when they surprised the market with an out-of-meeting decision. Traders should be prepared for any unexpected announcements.