Introduction

The week after Nonfarm Payrolls tends to be more sedate on the economic calendar. However, with a monetary policy decision from the Reserve Bank of Australia, a clutch of services PMIs to be announced and the minutes from the latest FOMC meeting, there is enough to keep traders on their toes. In Lat Am, the week is dominated by inflation.

Watch for: 

  • North America – US ISM Services and FOMC minutes are key, with Canadian PMIs too
  • Europe & Asia – The RBA is the main event, along with Services PMIs for Australia, Eurozone, and the UK 
  • LatAm – Inflation for Colombia, Mexico, Chile, and Brazil


North American data: 

  • US Factory Orders (Monday 4th April, 1500GMT) A monthly decline of -0.6% is expected in February (after a growth of 1.4% in January)
  • US ISM Services (Tuesday 5th April, 1500GMT) The ISM survey is expected to improve to 58.0 in March (up from 56.5 in February)
  • Canadian PMI (Wednesday 6th April, 1500GMT) The PMI is expected to improve to 61.0 in March (up from 60.6 in February)
  • FOMC minutes (Wednesday 6th April, 1900GMT) 
  • US Weekly Jobless Claims (Thursday 7th April, 1330GMT) Claims are expected to increase slightly to 205,000 (from 202,000 last week).
  • Canadian Unemployment (Friday 8th April, 1330GMT) The headline rate is expected to remain steady at 5.5% in March

The services PMI data will be the key data across major markets this week. For the US, the ISM Services survey has been falling for the past few months and is now very unusually below the Manufacturing data. After the flash PMIs showed a pick up in services activity in March, the ISM Services forecast suggests a first rise in four months. It would suggest that activity finished Q1 in better shape and some reduced fears over the impact of the Ukraine war. The Canadian Composite PMI is expected to continue to improve to 61.0 in March.

ISM Services PMI

The minutes of the March FOMC meeting will be three weeks old on Wednesday. Given the swathe of hawkish Fed member comments since the March FOMC meeting, where increasing numbers are calling for a 50bps hike at the next meeting, there may be little significant reaction to the minutes.

Market Reaction: 

  • USD will be reactive to ISM data surprises and perhaps the FOMC minutes.
  • CAD to move on Composite PMI


Europe & Asia: 

Australia Services PMI - final (Tuesday 5th April, 0000GMT) Final data for March is expected to be unrevised with services at 57.9 and the Composite PMI at 57.1 

  • Reserve Bank of Australia monetary policy (Tuesday 5th April, 0530GMT) The RBA is expected to hold rates at +0.10%.
  • Eurozone Services PMI – final (Tuesday 5th April, 0900GMT) No revision is expected with Services PMI at 54.8 and the Composite PMI at 54.5. 
  • UK Services PMI – final (Tuesday 5th April, 0930GMT) Consensus is not expecting any revision to Services PMI at 61.0 and the Composite PMI at 59.7.
  • Eurozone Retail Sales (Thursday 7th April, 1000GMT) Annual sales are expected to fall in February to 6.2% (from 7.8% in January)
  • ECB Monetary Policy Meeting Accounts (Thursday 7th April, 1230GMT) 

The Reserve Bank of Australia is on the way toward tightening monetary policy but is not there yet. The meeting this week will be no change to rates, however, it will be the message on forward guidance that will be key. The Federal election is in late May and the RBA is unlikely to hike before then. A Reuters poll puts the expectation of a first hike increasingly towards June or August. Any signals from the RBA that helps to shape this view would be AUD positive.

Services PMIs will also be the key reaction function for other major economies this week. These are final readings for Australia, the Eurozone and the UK, so are unlikely to cause too much of a stir. The improvement in the flash data has already been factored in, however, any revisions may cause a reaction on AUD, EUR and GBP respectively.

Final Composite PMIs

Market Reaction: 

  • AUD will be reactive to the message that the RBA gives on Wednesday regarding the potential for a first rate hike.
  • AUD, EUR, and GBP to react to any revisions on the final Services PMIs.


Latin America: 

  • Colombia CPI inflation (Wednesday 6th April, 0100GMT) Inflation is expected to increase to 8.61% in March (up from 8.01% in February)
  • Mexico inflation (Thursday 7th April, 1300GMT) Headline inflation is expected to increase to 7.44% in March (from 7.28%) with core inflation a shade lower at 6.59% (down from 6.64% in February).
  • Chile CPI inflation (Friday 8th April, 1200GMT) Headline inflation is expected to increase to 8.0% in March (up from 7.8%)
  • Brazil IPCA inflation (Friday 8th April, 1300GMT) Headline inflation is expected to increase to 10.81% in March (up from 10.54% in February).

Having shown signs of stabilizing around the turn of the year, inflation is picking up again. This is reflected in the inflation forecasts for all of the major LatAm economies. Their respective central banks have been fighting hard to get inflation under control over the past few quarters through a series of significant rate hikes. However, these efforts may need to be stepped up again if inflation comes in above expectations. Notable jumps in inflation seem set to be seen in Colombia and Brazil.

LatAm inflation

Market Reaction

  • Higher than expected inflation would increase the prospect of more aggressive rate hikes. COP, MXN, CLP and BRL will all be reactive to respective inflation data.





This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.