Goldman summarizes what happened in the last week and the key events expected to happen in the coming 5 days
Week in review
One of the key foci of attention last week was the outlook for Fed policy given the FOMC minutes and the slew of Fed commentary. This kept US yields elevated, but failed to prevent further weakening of the US Dollar on a trade-weighed basis. By the end of the week, the threat of a US government shutdown, which has subsequently been averted, generated concerns about the longer-term fiscal position in the US, also pushing the US Dollar weaker.
Granted, FX is a game of two-sides and the somewhat more hawkish-than-expected rhetoric from the ECB helped the Euro (in addition, the Portuguese government’s request for financial assistance did not weigh on the single currency). Asian FX remained in focus with yet new highs for the Aussie, and more broadly, the region’s currencies are on the move stronger following the lead of the IDR and, more recently, the KRW. We should also not forget that the CNY continues to fix lower. The Japanese Yen was the ‘odd man out’ in this trend, recording further weakness against the US Dollar through the week, as US-Japanese rate differentials continued to widen.
The barrage of Fed commentary in the coming week could keep the debate over the future of Fed policy in the spotlight, as will the US PPI and CPI data that will be out toward the end of the week. Meanwhile, oil prices continue to climb, with Brent sitting firmly above $120/bbl. Elsewhere, there is a deluge of China macro data on Friday, where we expect inflation to pick-up a touch and activity to remain reasonably solid. The trade data out on Sunday posted a tiny surplus. Import and export growth both improved substantially and were stronger than expected; however, we must be mindful of Chinese New Year effects. On the monetary policy front, we and the consensus expect BoK, BI, and BoC to keep rates unchanged, though the MAS is likely to re-center the SGD NEER.
Monday 11 April
China money and credit data (Mar): We expect the growth of CNY loans in March to be largely unchanged at 17.7%yoy and the amount to be around Rmb600 billion, in line with consensus. We expect March M2 growth to show a modest rebound to 16.0%yoy from 15.7%yoy in February. Consensus expects a rise of 15.4%.
Taiwan trade data (Mar): In our view, the trade data is likely to show a slight slowdown in March due to the impact of the Japan earthquake. Consensus expects a rise of 13.2%yoy after 27.3% on the previous reading.
France IP (Feb): Consensus expects 0.5%mom, last reading was 1.0%. We expect a reading of 0.2%.
Italy IP (Feb): We expect a reading of 0.3%mom vs. the previous reading of -1.5%. Consensus expects a reading of 1.7%.
Norway CPI-ATE (Mar): We expect a reading of 1.0%yoy after 0.8% previously. Consensus expects a reading of 0.9%.
Also of interest: Malaysia IP (Feb), India IP (Feb). Fed speeches by: Dudley, Yellen.
Tuesday 12 April
Korea Monetary Policy Meeting: We continue to expect hawkish comments from the Monetary Policy Committee meeting but no hike in the April meeting (neither does consensus). We expect a 25bp hike in either May or June.
Indonesia Monetary Policy Meeting: We expect Bank Indonesia to pause once again in April, following a pause in the policy meeting in March. The consensus also expects unchanged rates.
UK CPI (Mar): Consensus expects a print of 4.5%yoy after 4.4% previously.
Sweden CPIF (Mar): Consensus expects a rise of 1.7%yoy after 1.3% previously. We expect a rise of 1.6%yoy.
US Trade Balance (Feb): We expect a deficit of $42.5bn, consensus expects $44.0bn, and the last report was $46.3bn.
Hungary Consumer Prices (Mar): We expect a rise of 4.2%yoy after 4.1% previously
Canada Monetary Policy Meeting: Rates are widely expected to remain at 1%. It will be interesting to hear the Central Bank’s comments about the strength of the CAD.
Also of interest: Philippines exports (Feb), Australia NAB Business Conditions (Mar). Fed speeches by: Dudley, Hoenig, Tarullo, Fisher.
Wednesday 13 April
Eurozone (IP): The German and Spanish prints released last week showed rises of 1.7% and 0.1%mom, respectively. Assuming the Italian and French prints are in line with our expectations (0.3%mom in the former and 0.2%mom in the latter), we expect the eurozone aggregate will have risen roughly 1.0% in March.
Poland Consumer Prices (Mar): We expect a rise of 3.9%yoy after 3.6% previously.
US Retail Sales (Mar): We forecast an increase of 0.7%mom in total sales and 1.0%mom excluding vehicles. A portion of these gains will likely reflect higher oil prices, rather than increases in real sales volumes.
Also of interest: Australia Westpac consumer confidence.
Thursday 14 April
Singapore GDP (Q1): Consensus expects a rise of 5.8%yoy after 12.0%yoy previously.
Singapore MAS Meeting: Our baseline view remains that the Monetary Authority of Singapore (MAS) will likely tighten policy further via an upward re-centering of the SGD NEER bands at the upcoming bi-annual monetary policy meeting.
Japanese Portfolio Flow data for the week ending April 8. The last data set showed large Japanese selling of foreign debt. In comparison to previous years, we think it is related to fiscal year end. If the trend continues, it may signal repatriation of foreign assets in response to last month’s earthquake.
US PPI (Mar): We expect a rise of 0.7%mom on the headline reading, lower than the consensus estimate of 1.0%mom after 1.6%mom previously. Both we and the consensus are in line of with the core reading at 0.2%mom, the equivalent rise that was recorded last month.
Also of interest: Japan Reuters Tankan (Apr), US Claims, Fed speeches by: Duke, Kocherlakota, Plosser, Tarullo, Lacker.
Friday 15 April
China GDP (Q1): We expect Q1 GDP growth to moderate to 9.7%yoy from 9.8%yoy in Q4 last year. Consensus expects a reading of 9.4%yoy.
China IP (Mar): March industrial production growth is likely to be a shave lower than the previous reading of 14.9% at 14.1%yoy. Consensus expects a rise of 14.0%yoy
China CPI (Mar): We expect CPI inflation to rise to 5.2%yoy – as does consensus – up from 4.9%yoy in February, while PPI inflation is likely to moderate to 7.1%yoy in March from 7.2%yoy in February.
China retail sales (Mar): Consensus expects a rise of 16.5%yoy, a large jump on the previous reading of 11.6%yoy.
China FAI (Mar): Consensus expects a rise of 24.8%, virtually unchanged from the previous reading of 24.9%.
Indian WPI (Mar): Consensus expects a print of 8.39%, which is slightly above the RBI’s forecast of 8.0%.
US CPI (Mar): Rising energy prices likely lifted the CPI again in March. We look for an increase of 0.48%mom in the headline index. We expect that the core CPI increased by 0.18%mom, down from 0.20% in February. A deceleration in rent-related components could offset faster increases in prices of hotel rooms and apparel products.
US IP (Mar): Consensus expects a rise of 0.5%mom after 0.0% previously. We expect a rise of 0.7%.
US Empire Survey (Apr): The last reading was 17.5, consensus expects a slight fall to 17.
US TIC data (Feb): We will pick through the data for evidence of foreign appetite for US equity. The January data showed a surprising lack of foreign interest in US equity despite the focus on EM/DM equity rotation during that month.
US Reuters/Univ of Mich Consumer sentiment (P. Apr). The previous print was 67.5, the consensus expects a rise to 69.0.