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.
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.
Monday 24th April:
Tuesday 25th April:
Wednesday 26th April:
Thursday 27th April:
Friday 28th April:
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.
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.