The late Easter holiday break means the new quarter kicks off in most western economies with a short trading week featuring the now usual step-up in key data and interest rates decisions.
The start of month global surveys of manufacturing activity will be issued today and service sector survey data later in the week.
For us here it will be the Reserve Bank meeting tomorrow on interest rates and on Friday (Good Friday), the US jobless and employment data, a key set of figures) will be released even though it is a holiday.
The Reserve Bank of NZ also meets this week as does the Reserve Bank of India.
The RBA decision is simple – will the central bank lift the cash rate or leave it unchanged. There’s divided belief in the market about the outcome.
Last week’s inflation indicator for February came in at 6.8%, down from more than 8% in December and the lowest reading for six months – the Consumer Price Index for the December quarter was 7.8%.
Even though the labour market remains very tight and job vacancies have hardly moved in the past three months or so, wages have not risen as sharply as the worrywarts had been forecast.
So it seems as though inflation has peaked and now the RBA has to decide whether to go one more increase after boosting the cash rate by 350 basis points to an 11-year top of 3.6% to contain inflation.
While many analysts still think the RBA will hike at least once more, some believe it might pause in April before moving in May following inflation data for the first quarter. But major banks mostly think the cash rate will rise tomorrow and the Fed will then sit on its hands for a while.
Moody’s economists see a 0.25% rate rise this week and then, as they remarked in their weekly note, “the case for a pause has strengthened” in Australia.
Other data releases here this week include building approvals and new finance data (especially home loans) later today (Monday) and trade data for February on Thursday.
In NZ, Moody’s economists sees the RBNZ going for a 0.25% rise to take the cash rate to 5%, despite the surprise 0.7% slide in economic growth in the December quarter.
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In the US, the economic calendar steps up highlighted by the release of the March employment report at the end of next week.
Moody’s economists say they We expect payroll gains will moderate further from the elevated rate of growth seen in January and February. The unemployment rate is likely to hold steady as growth in the labour force keeps pace with job gains.
Market forecasts are for a rise of 235,000 – 240,000 new jobs, down from February’s 311,000 with no change in the near 50 year low in the unemployment rate of 3.6%.
Before then Tuesday sees the release of the February Job Openings and Labor Turnover data (mostly vacancies). Job vacancies remain high, signalling continuing strong demand for labour market.
There’s the key manufacturing and services activity surveys – manufacturing is forecast to continue to be weak.
Other key US data to be released this week include construction spending, vehicle sales, factory orders and international trade.
Three Fed members are due to speak in the shortened week.
The Indian Reserve Bank is forecast to lift rates as well, but that might not be a strong certainty.
In Europe, mixed industrial production figures in the major euro zone economies will be the main releases to look out for – solid in Germany, weak in France because of the spate of strikes.
Meanwhile, retail sales in Italy likely inched down 0.3% month over month after jumping 1.7% in January. Still-high inflation is draining purchasing power, and after the strength in January we expect households shifted gradually to spending on services or increasing precautionary savings.
The Chilean central bank also meets before Easter and is expected to increase rates.
